Recovering debts through court

When creditors set out to recover monies owed to them they have a wide range of tools at their disposal. Three of the most commonly used legal mechanisms available to creditors are Charging Orders, CCJ’s or County Court Judgments and Statutory Demands.

If you find yourself trying to deal with any of these processes then you should to seek independent legal or debt advice. If cost is an issue, a free Debt Advice company or even a local Citizens Advice Bureau may be able to assist. Make an appointment to see a CAB advisor or get in touch with us for further information. Read on to find out more about these three processes? 

Charging Order

When a creditor is faced with a situation where an unsecured debt is not being repaid in accordance with the terms and conditions under which the funds were advanced, then that creditor may seek to have the court issue a Charging Order against your home, land or other property. A Charging Order can turn an unsecured debt into a secured debt via a charge on the your asset or property.

By issuing a Charging Order the creditor is looking to protect their interests by securing the debt against the property in case you should subsequently decide to enter an IVA (Individual Voluntary Arrangement) or declare bankruptcy. In those circumstances, if the debt was unsecured, the creditor would risk being unable to recover any of it.

County Court JudgementNormally, the court initially issues an Interim Charging Order to afford time for you to challenge the debt or to reach an amicable agreement with the creditor in relation to discharging the debt. Should no such accommodation be reached between you and the creditor, the court will in due course grant a Final Charging Order to the creditor enabling it to change the status of the debt from being unsecured to being secured.

If the debtor does not repay the debt to which the charging order relates, it is possible for the creditor to seek and obtain an order for sale of the property from the court to force the repossession of the property, although this action is relatively rare. If the debtor discharges the debt, then the court will remove the charging order on receipt of a relevant application.

CCJ or County Court Judgement

A County Court Judgment, otherwise known as a CCJ, is an order by the court requiring you to pay what you owe to a single specific creditor. If you are unwilling or unable to pay a debt, the creditor can make an application to the court to make a CCJ order.

Prior to making a CCJ order, the court affords an opportunity for you to defend your position by for example, explaining why you feel that the debt claimed is not owed. You can also explain why you are not in a position to pay the debt and you are allowed to suggest alternative payment plans to the court.

The court reviews all the circumstances of the matter and decides whether to issue a CCJ order requiring the full amount of the debt to be paid or to be paid in instalments in accordance with a periodic payment plan, usually monthly.

Statutory Demand

A Statutory Demand is a formal notice demanding the payment of a debt within a period of twenty one days. A creditor may issue such a notice against a person or company owing at least £750 to it. If the debt is not paid within the twenty one days, the creditor may commence bankruptcy proceedings, or in the case of a company, liquidation proceedings against the debtor or company. A Statutory Demand should never be ignored, even if there is no debt whatsoever, as you could find that you have inadvertently been made bankrupt.

If the Statutory Demand is incorrect, you may apply to your local court to have it set aside. If the debt is less than £750 or if you dispute the amount of the debt or if you believe that the Statutory Demand has been issued in error or if you have a counterclaim for more than the amount owed, these are all grounds for having the Statutory Demand set aside.

If you accept that you do owe the amount claimed in the Statutory Demand, you should seek to discharge the debt within the twenty one days allowed in either a lump sum or in instalments. If you do not discharge the debt in that time, the creditor may petition for your bankruptcy.

Get Debt help

Get Insolvency HelpIf you have been issued with a Charging Order, a CCJ or a Statutory demand and you need advice on what to do, get in touch with us at McCambridge Duffy. Our advisors can assess your situatuion fully and can determine what options you have for addressing the problem.

All advice is free and confidential. Fill in the form on this page and we will contact you as soon as possible.