County Court Summons

Meaning – A creditor has tried to recover their debt from you but without success. You may have offered an informal deal but now their patience is wearing thin.

You may have tried to stave payment off claiming the debt is invalid or issued a counterclaim. They have issued an action to commence recovering their money in the County Court

What can I do, what should I do? – You have time to pay the claim of the creditor. Try to offer a payment deal sensibly before the action will be heard in the court. Try to do a deal or pay the debt. If you cannot pay it look at Am I Insolvent page. If you cannot pay it you could be insolvent.

You can dispute the claim if it can be proven the debt is not correct. Look, carefully, at the forms for detailed instructions on how to defend the claim.

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Warrant

Meaning – As the creditor has not been paid under the judgment the creditor can apply to the court for a warrant of execution. If the debtor is in another area the court can forward this to the local court. A notice of warrant will be issued to the debtor. If payment is not made a bailiff of the court can be sent to collect payment or seize goods.

What can I do, what should I do? – As always a deal can be struck with the creditor and or the bailiff to repay over time. You have demonstrated an inability to pay the debt and are offering to settle in a period to be agreed. For small debts this is often acceptable to the creditor.

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Taking control of goods (previously Walking Possession)

Meaning – A bailiff (for the County Court) or Sheriff (for the High Court) has visited your premises and ‘taken control’ of goods after issuing a Notice of Enforcement.

He/she has asked for payment of the proven debt. If you have not paid within seven days (excluding Sundays and Bank Holidays) of receiving the Notice of Enforcement, the officer can ‘take control’ of the goods, equipment, fixtures, stock etc on the premises.

If you don’t pay once the officer arrives, you will need to sign a Controlled Goods Agreement. If you refuse, the officer can take the goods away immediately, giving seven days notice of a sale. If the Agreement is signed and the goods stay, they must not be sold or traded as this is a criminal offence.

It is also not usually possible for the bailiff to possess or remove goods that do not belong to the individual – if you have a debenture the goods therefore are charged to a bank. Whilst this is not possession bailiffs do not (usually!) want to get embroiled in arguments with high street banks. If the goods are subject to HP then they cannot be taken.

In reality isn’t this is just deferring the inevitable? You are probably insolvent if a bailiff is calling.

Once this procedure is in place, it is STILL possible to do a deal with the bailiff to keep the goods whilst making regular payments – default and he may remove them without notice.

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Bankruptcy Petition

Meaning – this is one of the most serious action that can be taken against the debtor. Clearly you and the business have breached any trust the creditor had, deals have failed, cheques bounced and generally you have not kept your word.

See the Bankruptcy page for more details.

What can I do, what should I do? – Other than pay the debt very little. On payment the debt will have increased because of the costs of the plaintiff (creditor). If the action is clearly unfair or an abuse then you MUST take legal advice immediately.

If the petition is fair and indefensible, then in due course the petition hearing will be heard. At this stage the bank will find out and they will FREEZE the soletrader’s bank account to prevent any misfeasance or sale of assets at undervalue or other illegal acts by the debt.

County Court Judgment

Meaning – Having pressed for payment the creditor has now got the court to agree that there is a valid claim for the money. You have 30 days from the date of the Judgment to pay in full plus any costs incurred. Otherwise the Judgment will be registered at the courts and with credit reference agencies.

Remember an outstanding Judgment is proof of your insolvency and allows a creditor to issue a bankruptcy petition. See Am I Insolvent for further details. There were over 223,000 CCJ’s issued against businesses in 2014 in the UK, so they are quite a common tool to tackle late payment offenders.

What can I do, what should I do? – If possible always try to pay the debt within 30 days of Judgment. This will ensure that the Judgment is “set aside” and will not be registered with credit reference agencies. If you cannot pay it then this of course further proves insolvency. If it is registered then getting credit in future becomes much more difficult.

If you are under real cashflow pressure but are attempting to trade out call the creditor/ their solicitor or the bailiff and try to agree a phased payment. Often they will agree but they may use the non-payment to push for further action such as distraint or winding up.

You may be surprised at how long a time you can spread payment through this type of deal. Think about it, the creditor just wants paid, even at £50 per week this is better than bankruptcy because they will, inevitably, lose the whole amount in your bankruptcy.

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Statutory Demand

Meaning – Usually this action is taken after a creditor has obtained a Judgment. It is a formal demand for payment of an undisputed debt (over £750) – the debt must be paid within 21 days of the demand being issued.

Failure to pay a statutory demand can lead to a winding up petition being issued. In any event, the creditor has to pay to issue this document/action and it is now becoming much more serious.

What can I do, what should I do? – Warning! This action means the creditor is serious about getting the debt paid. If you don’t pay the debt in the 21 days they can go to the final step of issuing a bankruptcy petition against you.

If you cannot pay the debt, talk immediately to a turnaround practitioner, review the contents of this website and make a plan for survival – such as an IVA, or urgent refinancing. Or if the business is simply not viable talk to an insolvency practitioner.

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Notice of Enforcement (previously Distraint)

Meaning – A popular tool for landlords where rent or other payments are not made. If the landlord has agreed a payment deal and the company is not keeping to it, the landlord has various powers.

Issuing a Notice of Enforcement and ‘taking control’ of goods means that an agent of the landlord can effect entry to remove goods or assets for sale to pay for the debt due.

What can I do, what should I do? – If you cannot pay the debt, speak to a turnaround or insolvency professional. The goods may belong to the bank or other secured creditor. The business is plainly insolvent and you could be breaking the law by continuing to trade. It is possible for a turnaround practitioner to help in these circumstances – BUT you have left it very late.

Proposing an IVA is a solution, but having demonstrated the inability to deal with the cash flow problems are you sure the business is viable?