Debt recovery guide: diligence

14 December 2011

Sometimes, even after a court has ordered that someone who owes you money should pay what you are due, that may not be the end of the matter. You may be lucky and receive payment, but this isn’t always the case. You might need to take further action to get your money back from the ‘debtor’. This process is known as ‘diligence’. Inksters can help you to recover the maximum amount in the most efficient way.
 
There are a number of options available to you, depending on the situation of the debtor. It can also depend on whether your debtor also owes money to others, and to whom.
 
You can take action to have a hold over the debtor’s assets (but only those which they alone own) and depending on the asset; there will be different routes to take. First, an order, or decree, is issued to the debtor setting out the amount owed and seeking payment. Expert advice from the outset is crucial as any errors in the issuing of this documentation can mean the action will fail. 
 
You can seek an attachment order that means the debtors assets are ‘seized’ such as valuable household items. However, some of the most obvious items that may appear to fall under this category are exempt, such as the debtors own car, any ‘tools of the trade’ that they use for work, books, any equipment with a value of less that £1000. Money is also exempt, but there are special rules that can apply to seizing cash from a debtor. Furthermore, any goods that the debtor holds on credit, such as a car or hire purchase, may not apply. The court would then draw up a list of all applicable goods that the debtor is presumed to own and once the report is submitted to the court, the debtor cannot sell any of those items to avoid payment. A public auction would then take place to raise the funds.
 
There are further options. Wages can also be arrested (with the exception of some benefit payments), and when it comes to the debtors real estate, for example their house, you can apply for an order to gain certain rights and control over their property. This could prevent them from selling or re-mortgaging, known as inhibition. In some cases, through a process known as adjudication, you can apply to the court to remove the occupants and even rent the property for a period of time (10 years) before applying to the court to sell it if the debt has still not been paid. However, adjudication is set to be abolished in the future under the Bankruptcy and Diligence etc. (Scotland) Act 2007.
 
In all cases, time is of the essence as if your debtor owes money to others and they are unable to meet those debts, earlier claims can take priority over later claims, except in certain circumstances where one of the creditors may be a mortgage lender, known as a secured lender. In this case, even if you take action to gain control of the debtor’s house, the mortgage company as a secured lender will still have priority.
 
Someone who owes you money could further delay matters by applying to the court for a ‘time to pay’ order, giving them the chance to pay what they owe. In some cases, it may not be practical to pursue a debtor who has no way of paying their debts. Unfortunately, there is little redress in this situation and no legal penalty for the debtor. However, Inksters are experienced in assisting people to recover money owed to them and can help guide you through the various options to ensure the best chance of success.

 

 

 

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