Enforcement in Scotland………

Posted by diane.bantten

Enforcing a Judgment in Scotland

If you are contracting with a business in Scotland you may not recognise that as far as
the law is concerned you are dealing with a company in a different country!

When there’s a problem and the clients need action raised, they can be surprised to be told.
Even sophisticated clients who have been through the courts in England many
times over may never have seen the inside of a Sheriff Court or consulted an Advocate at Parliament Hall or litigated in the Court of Session.

Acquit can help you prepare the legal documentation to issue a claim against a company in
Scotland but it is important to be aware that once Judgment has been obtained
there will be some hoops through which you/we will have to jump!

Ok, so for the technical part …..

The basis for the procedure is section 18 of, and paragraph 2 of Schedule 6 to, the Civil Jurisdiction and
Judgments Act 1982 and CPR 74.17. You need to apply under CPR
74.17 for a certificate of money provision by filing, at the court where the
judgment was given or has been entered:

1. An application, which should be by Form N244, in appropriate terms, stating
that the judgment remains unsatisfied and applying for the issue (by virtue of
the relevant provisions of the 1982 Act and CPR 74.17) of a certificate of
judgment to register for enforcement in Scotland.

2. Written evidence (complying
with Practice Direction 32) stating:

(a) the name and address of
the judgment creditor and, if known, of the judgment debtor;

(b) the sums payable and
unsatisfied under the money provisions of the judgment;

(c) where interest is
recoverable on the judgment, either –

(i) the amount of interest
which has accrued up to the date of the application, or

(ii) the rate of interest, the
date from which it is recoverable, and the date on which it ceases to accrue;

(d) that the judgment is not
stayed;

(e) the date on which the time
for appealing expired or will expire;

(f) whether an appeal notice
has been filed;

(g) the status of any
application for permission to appeal; and

(h) whether an appeal is
pending.

3. A draft certificate in Form 111 .

4. Once you have the
certificate, we would instruct a Scottish Agent to deal with enforcement.

So, is your mind blown, shall we take the strain for you …. visit www.acquit.org.uk  or just call us for an informal chat.

County Court Judgment some statistics!

Posted by diane.bantten

The number and value of county court judgments (CCJs) against businesses in England and Wales dropped in the first half of 2012, according to the Registry Trust.

The latest figures showed that the total value of debt judgments continued to decline, down 5.4%, or £15.8m lower than the total for the first half of 2011.

In the first six months of this year, businesses were ordered to repay debts worth £276.1m, compared with £291.9m in the same period the previous year.

The non-profit Registry Trust, which operates the register of judgments, orders and fines for England and Wales, revealed that a total of 65,022 judgments were issued against businesses in the first half of this year.Businesses faced 7,074, or 9.8% fewer CCJs in 2012, compared to the first six months of 2011, when there was a total of 72,096 judgments.

According to the organisation, the figures depict a longer term trend, with the number and value of CCJs against companies having been decreasing since 2009, when 116,633 CCJs worth £510.1m were recorded.

Statistics from Northern Ireland showed that the total value of default and small claims judgments issued against businesses and consumers in the first half of the year was 4.7% lower than the same period in 2011, down from £11.5m to just under £11m.

Despite a three-year decline in the value of judgments for debt in Northern Ireland, the number of judgments increased by 5.6% to 4,975, from 4,713.

There were 387 high court judgments to the value of £29.1m issued in the first six months of 2012, slightly below the annual average value of £31.7m between 2008 and 2011.

Hurlston said that it was too early to draw conclusions about Northern Ireland’s “debt picture”.

Brian Havercroft, chairman of the Civil Court Users Association and high court services director at Marston Group, said that the reduction in judgments was a result of the “economic situation”.

“In addition, creditors are less inclined to use the courts due to the cost and delays which, coupled with the government’s policy of reducing the effectiveness of enforcement, will mean a reduction in the use of the courts.”

He added: “Creditors need to know that if they issue proceedings there is a reasonable chance of making recovery but sadly the government is doing little to reverse the trend that has occurred in protecting debtors to the detriment of the creditor.”

Mortgage Shortfall Debt

Posted by diane.bantten

MORTGAGE SHORTFALL DEBT

I am convinced that my purpose in life is to help people.   It’s pretty much the ethos behind Acquit Debt Recovery – for the most part we help companies that have not been paid and as a result their cash-flow is sticky!  It is what we do  – the fact that we get paid on our results is a bonus of course!

This said, we were recently contacted by a lovely lady – lets call her Jane as in doe although that’s not her real name of course.   She told us a sad story about having to hand back the keys to her old property, and after the property had been sold at an undervalue, the Estate Agents had taken their cut what had been a £30,000 loan turned into a debt of over £70,000.00.

She came to us for help.   It isn’t our thing of course, but we know people who are now in the process of helping Jane out of a tricky situation.

Anyway, why am I blogging about it …… I thought it would be helpful to explain just what a mortgage shortfall – I have taken a lot of this info from the Bankruptcy & Insolvency website – obviously it is for information and to point you in the right direction – it is not a substitute for taking your own independent legal advice.

What is a mortgage shortfall?

Many people find themselves being asked to pay large sums by their mortgage lender after they have been repossessed or have handed in the keys on their house. Often people think that once they have left the house their liability ends. However, this is not the case if the house is sold for less than the outstanding mortgage. The debt that remains is usually referred to as a mortgage shortfall. This also include s the monthly instalments and interest that has been added on to the debt until the house is sold, plus legal and estate agent’s costs. You can still be asked to pay back a shortfall a long time after you left the house as mortgage lenders may try to pursue a shortfall debt up to twelve years afterwards.

How long will this hang over me?

Lenders think that mortgages can be pursued for 12 years under the Limitations Act. Most other debts can only be pursued for 6 years. The time period starts running from the last time the lender contacted you and you agreed that you owed the money (“acknowledged” the debt ) or you made a payment to the lender (or someone who owned the house jointly with you made a payment).

  • Following the cases of Paragon v Banks and Halifax v Grant, The Court of Appeal has made a decision. They say the limitation period for mortgage lenders trying to recover mortgage shortfall debts is 12 years (Section 20 of the Limitation Act 1980).
  • This means the lender has 12 years from the last time a payment was made on the account or you acknowledged the debt to start action to recover the capital owed on the mortgage. It appears that the lender has 6 years to start action to recover interest added to the debt.
  • This decision means that you will not be able to argue that lenders should have started action within 6 years. You may need to contact us again for further advice on your situation. Phone the Bankruptcy & Insolvency advice line for advice 0800 074 6918.
  • From 31 st October 2004 the Financial Services Authority (FSA) has taken over the regulation of mortgage lending and problems with existing mortgages. The Mortgage Conduct of Business Rules say that if the lender decides to recover the mortgage shortfall debt they must make sure you are told about this. This must happen within six years of the date of sale. If the lender does not do this then you can complain to The Financial Ombudsman. The Council of Mortgage Lenders (CML) also follows this policy. See the section below.

Council of Mortgage Lenders Policy

Mortgage lenders who are members of the Council of Mortgage Lenders (CML) have not yet changed their policy on recovering mortgage shortfalls in light of The Court of Appeal decisions above. You can still argue the policy to your lender as a point of good practice.

From 11 February 2000 the policy is as follows:

The CML says anyone whose property was repossessed and sold and who has not been contacted by their lender within six years from the date of the sale will not be asked to pay the shortfall.

If your lender has already contacted you before 11 February 2000 then it appears they will continue to try and recover the shortfall even if your house was repossessed and sold more than six years ago.

If this applies to you then you should read the factsheet for options to negotiate with the lender. You could try arguing that it is unfair for the lender to keep trying to recover the money from you if your house was sold over six years ago.

Point out they have already accepted that they have a “commitment to fair and sympathetic treatment for people for whom possession cannot be avoided” and have already limited the recovery period for new cases.

 

Jointly-owned debts

If your mortgage was in joint names, you need to check what the other borrower has done. If they acknowledge the debt it doesn’t affect you BUT if they have made a payment the limitation period starts running again for both of you from the date the last payment was made.

 

Ask for the details of the debt

If you are contacted by your lender or their agent, the first thing to do is to ask for a detailed breakdown of how they have worked out the amount they say you owe. This should allow you to check all the figures and give you a basis for deciding if the correct procedures have been followed.

Important: don’t acknowledge to the lender that you owe the debt at this stage.

You should ask for details of:

  • the exact sale price of the house
  • details of any valuations made on the property
  • how they have calculated the interest that has been added on up to the time of the sale and since the sale

and

  • any solicitors, estate agency fees or court costs that have been added on.

What if my lender does not reply?

If you lender is being awkward about supplying a breakdown of the mortgage shortfall account to you, then you should write to the lender and request they send you all information held by them on computer to do with the mortgage account. This request should be made under the Data Protection Acts 1984 and 1998 and refer to the “right of subject access” under the acts.

The lender can charge you up to £10.00 for supplying the information. They can also write back to you requesting you to be more specific or ask you for more information. You should be sent anything held on computer but not paper or microfiche files. (The Data Protection Act 1998 also covers paper and microfiche files but will only cover new cases).

If the lender does not comply with the request you should complain to the Information Commissioner who will take it up with the lender and can serve an Enforcement Notice if the information is not sent.

Mortgage Indemnity Insurance

You also need to check whether you had a Mortgage Indemnity Guarantee (MIG) on the house. This is an insurance that covers the mortgage lender against a loss. You would usually have paid it out as a lump sum when you first bought the house, or it could have been deducted from your mortgage advance at the time.

You need to check that your mortgage lender has made a claim on any insurance available. This could limit the amount you owe to the mortgage lender although the insurance company can ask you to pay back the amount they pay out to the mortgage lender. The insurance company sometimes asks the lender to collect their share for them. From 31st October 2004 your lender must inform you in writing if your mortgage shortfall debt may be pursued by another company.

Some people argue that the indemnity policy should cover the borrower for any shortfall as they paid for the insurance in the first place.

This is a complicated area of law .

Following a case called Woolwich v Brown 1995 the Court of Appeal has decided that generally mortgage indemnity insurance only covers the lender and not the borrower.

Can I dispute the amount being claimed?

Building societies have an obligation to find the ” best price which can be reasonably obtained” whilst banks have a ” duty of care” to a borrower. From 31st October 2004 the FSA mortgage rules say that all lenders must obtain the “best price that might reasonably be paid”. It is possible to dispute the amount being claimed by the mortgage lender in some cases.

  • If you can show that the house was sold for substantially below the proper market price taking into account the market conditions at the time of sale.
  • If the house was not marketed sufficiently to obtain a good sale price.
  • If you arranged a sale which was refused by the lender, but after repossession the house was sold by the lender for a much lower price.
  • If the house stood empty for a very long time you may be able to argue that the mortgage company should have rented it out and therefore offset possible rental income against the shortfall balance.
  • If the lender decides to leave the house empty and not sell it either , then you may have an argument for asking the court to order a sale .

Who do I complain to?

From October 31st October 2004 the Financial Services Authority (FSA) has taken over the regulation of mortgage lending and problems with existing mortgages. This applies to all mortgages where the lender had a first charge over the property and at least 40% of the property is occupied by you and/or your immediate family. It does not apply to secured loans regulated by the Consumer Credit Act. The new rules say that the lender must market the property as soon as possible and obtain the “best price that might reasonably be paid” taking into account factors such as market conditions and the increasing amount you owe on the mortgage debt.

If you are not happy with the way in which your lender has dealt with your mortgage shortfall, you can complain to The Financial Ombudsman.

Negotiating Repayments

The debt owed to either the mortgage lender or the insurance company can be treated in the same way as any other unsecured credit debt. One of the following options may be possible.

  • We suggest you read through the Money Advice Direct information pack “Dealing with your Debts” and prepare a detailed personal budget. Work out your current income and essential outgoings. If you can afford to make payments, one option is to contact the lender in writing, enclose a copy of your personal budget and make an offer of payment.
  • Be careful: lenders may ask you to fill in their own budgeting form. It may ask you for extra details you do not wish to provide . If they have not been to court you do not have to give employers/tax/bank details, but your lender may be less likely to help if you refuse.
  • If your house has been repossessed and you are now in rented accommodation, you need to explain to them that you no longer have any assets such as a house and outline your exact financial position. This should help persuade your lender that there is little point in pursuing you for the debt.
  • If you can afford only a small offer of payment per month and have no assets then you might want to suggest that they don’t pursue the debt as you are never going to be able to pay it back. Mortgage and insurance companies do not always take action to recover the debt when they can see it is pointless for them to do so. ( e.g. write off the debt).

Warning: you should make sure that your full and final settlement offer has dealt with the whole shortfall and you do not still owe money to an insurance company for the amount paid out under any mortgage indemnity insurance .

  • Do not pay any sort of part payment until you have the creditor’s written agreement that they have accepted your offer in “full and final settlement”. It is a good idea to send the payment via a third party as this makes the deal more legally binding. Never make a payment until the offer has been accepted in writing by the lender . If someone else is to make the payment on your behalf then they should only provide the money on condition that the offer has been accepted.

Log Book Loans

Posted by diane.bantten

I make no apology for posting direct from the OFT website – this is important news for consumers.  Acquit of course specialises in Commercial Debt but felt it important to put this out there!

OFT welcomes Tribunal’s decision to strike out logbook loans’ appeal

125/11    18 November 2011The OFT has welcomed a Tribunal’s decision to strike out appeals by the UK’s biggest logbook loan businesses against the removal of their consumer credit licences.The First-tier Tribunal’s ruling to strike out the appeals of Nine Regions Limited (‘NRL’) and Log Book Loans Limited (together ‘Log Book Loans’) follows the OFT’s original decision that Log Book Loans were unfit to hold consumer credit licences.Logbook loans are secured on vehicles such as cars and motorbikes. If the borrower defaults, the loan company can seize the vehicle without going to court. Even after the vehicle is sold the borrower can still be pursued for any shortfall.The OFT asked the Tribunal to strike out Log Book Loans’ appeals because of evidence that emerged during the appeal hearing. Log Book Loans admitted that thousands of letters had been sent to borrowers in the name of a firm called Adams Spencer & Phillips (Legal Services) Limited (‘ASP’) falsely threatening to take legal action on behalf of NRL.The First-tier Tribunal found that:

  • the letters were sent to give borrowers a false impression that ASP was a body authorised to carry on activities as if it were a firm of solicitors, such as the conduct of litigation
  • ASP actually had no employees and was not a body or individual duly authorised to bring legal action on behalf of NRL
  • deceptive practices included that between September 2009 and April 2010, employees of NRL called customers pretending to be employees of ASP
  • the ASP letters were part of a deliberate deceit
  • the deception was played out, not simply in front of customers but also with third parties such as solicitors acting for borrowers, as well as the Financial Ombudsman Service.

David Fisher, Director of the OFT’s Consumer Credit Group said:

‘The OFT welcomes the Tribunal’s decision to strike out the companies’ appeals. The decision confirms our view that these companies are unfit to hold their consumer credit licences.

‘Intentionally deceiving debtors as part of a debt collection policy is an extremely serious matter, which calls into question a licensee’s fitness. We expect businesses licensed by the OFT to treat all their customers, including those in arrears, fairly and transparently.’

NOTES

  1. A copy of the decision is on the First-tier Tribunal’s website.
  2. Log Book Loans can seek permission to appeal the decision of the First-tier Tribunal to the Upper Tribunal (Administrative Appeals Chamber) on the grounds that there has been an error of law. If the appeal period were to be extended in this way Log Book Loans would be able to trade under their licences until the end of the appeal period.
  3. The Consumer Credit Act 1974 requires most businesses offering credit, lending money or involved in activities relating to credit or hire to be licensed by the OFT.

New Year’s Resolutions

Posted by diane.bantten

NEW YEAR’S RESOLUTIONS

As 2011 draws nearer to its end I have taken some time to ponder on the trend of instructions received by Acquit.  I have noticed is that Credit Controllers are taking longer to realise that they need third party assistance.  Perhaps they do realise but are trying to avoid instructing someone to collect their money and thus “save” money.  This is a false economy.  They are seriously hindering their employer’s cash-flow and chances of successfully recovering all monies that are owed.  The average age of overdue invoices coming into for collection is almost six months old!  Delay merely allows those that owe you money to utilise your money and ease their own cash-flow.   I am always waxing lyrical about the need to review your credit control systems and terms of business ….. why not make it your New Year’s resolution to do just that? Call Acquit and we will be happy to help you turn over a new leaf!

Rubber cheques…..

Posted by diane.bantten

Under the law if you write out a cheque and present it to someone as payment you are effectively promising that the cheque will be honoured by your bank, if for any reason the Bank does not honour it you imply that you will compensate that person in full. So, if your have been on the receiving end of a bounced cheque you can immediately sue on the basis of their dishonour and there is virtually no Defence!

Banks writing off debt ……..

Posted by diane.bantten

Write-offs of bad debts by UK banks unexpectedly rose by another 8% last year to a record £17.3bn, posing an increased challenge for firms looking to secure bank finance.
A new report by independent finance providers Syscap found that the increase in write-offs was partly driven by increased bad credit card debts which rose by 29% in 2010 to £5.32bn, up from £4.12bn in 2009.
According to the research, as Banks continue to suffer big hits to their balance sheets, it is unlikely that small and medium sized companies will see a return to traditional lending levels by the banks.
Philip White, chief executive of Syscap, says that small and medium sized businesses “looking to expand, create jobs and invest are going to continue to find getting a conventional loan from a bank hard slog.”
He advises that companies should “explore other forms of finance such as leasing” adding that “businesses will find it far easier to raise capital investment by securing funds against that asset through leasing rather than by getting a normal loan.”
According to the FLA (Finance & Leasing Association), total asset finance provided to businesses in the last three months (to Feb 2011) has increased by 20% to £5.1bn up from £4.27bn in the same period last year.
It seems clear to me that making your cash FLOW is of paramount importance – if you need a hand with that call Diane on 01202 432022 or 07788 416859

Cheques …… are they being abolished?

Posted by diane.bantten

I am of the older generation although it pains me to admit it!    I enjoyed the good old days when you could go shopping and pay for items by cheque enjoying the luxury of hanging on to hard earned cash a little longer.  However, we now live in an electronic age don’t we???? So when I ask a debtor to deal with an electronic payment quite often a cheque will arrive on my desk by way of a substitute.   It’s pretty inconvenient,  it involves  having to complete the paying in book, a drive to the bank, trying to find a parking space, queuing up to pay it in and then as if all that was not bad enough – a wait of at least 5 working days for it to clear!!!!!

So, rant over, I am in favour of their abolishment but apparently that’s not going to happen any time soon.  What is happening is that the UK’s Cheque Guarantee Card scheme closes on the 30th June 2011.

The cheque guarantee card scheme was introduced in 1969, at that time credit cards and automated payments were quite new and debit cards weren’t yet with us. Over the past 20 years cheque volumes have decreased and more recently cheque as a method of payment has almost disappeared.  The Payments Council which sets strategy for payments in the UK reviewed whether it would be in customer’s best interest to manage the demise of the scheme or let it wither on the vine allowing banks to withdraw the scheme separately.  The Payments Council was consulted and market research carried out, the results supported the conclusion that it would be better for all if the decline and demise of the scheme was co-ordinated centrally.

The future …….. The Payments Council has set a target date of 2018 to close the central cheque clearing, however, this date is not set in stone and will only proceed if acceptable alternatives are in place and being used by all those who currently rely on cheques.

If you would like to know more have a look at www.paymentscouncil.org.uk

County Court Judgment – what next?

Posted by diane.bantten

My clients are often confused about the legal process and believe that once you have the County Court Judgment in your hand ordering the Defendant to cough up and pay that the job is done!
If only it were that easy! If you have embarked upon the issue of a County Court claim and the Defendant has ignored it you can obtain a default Judgment. This is a Judgment where the Defendant has failed to acknowledge the claim or file Defence has not been filed. Chances are if the Defendant hasn’t reacted to the claim he/she/it isn’t going to react to the Judgment either.
Enforcement
The onus is upon you, the Claimant, to enforce the Judgment – there are a number of avenues to choose from, it will depend upon the type of Defendant – is it a company or an individual, it will also depend upon the amount owed.
My personal favourites are High Court Enforcement officers as opposed to the County Court Bailiffs.
Who can best enforce your judgement?
If you have a debt of between £600 and £5,000 you have a choice for enforcement between either the County Court Bailiff or the High Court Enforcement Officer (HCEO).
Debts below £600 can only be enforced by County Court Bailiffs. Judgments for debts of £5,000 and over can only be enforced by an HCEO.
In April 2004, the law was changed to allow debts between £600 and £5,000 to be transferred up to the High Court for enforcement, a change which has given creditors a great deal more choice with enforcement.
High Court Enforcement Officers (HCEO)
HCEOs are authorised by the Lord Chancellor and work privately or in private companies.
HCEOs work under the authority of a Writ of Fieri Facias (Fi Fa). This is issued when a County Court Judgment, Order or Tribunal Award is transferred to the High Court for enforcement via Form N293A and a court fee of £50.00. The transfer process normally takes between 5 and 21 days.
If successful, the HCEO will collect your judgment debt, your court costs, your £50 transfer up fee, interest at 8% and their fees, costs and charges from the Defendant.
HCEOs earn their fees from the judgment debtor, but only when they collect. If the HCEO is unable to collect, there is an industry regulated abortive fee of £60 plus VAT paid by the creditor for each address visited. Other than the abortive fee, the HCEO receives no income for an unsuccessful enforcement.
As a result, HCEOs tend to have significantly higher collection rates than those of the County Court Bailiffs, who are salaried without any financial incentive to collect and normally pretty understaffed.
Unlike the County Court Bailiff, the HCEO does not have to give the judgment debtor any advance notice of their intention to collect, giving them the advantage of surprise. HCEOs are also permitted to force entry into commercial premises to enforce, a power not permitted to County Court Bailiffs.
County Court Bailiffs
CCBs are salaried civil servants employed directly by the court service. They can enforce on judgments up to £5000. They work under the authority if a Warrant of Execution which can be requested from the County Court for a fee of £100.
Before they attempt to collect, the County Court Bailiff must write to the defendant advising them of their visit.
County Court Bailiffs will collect your judgement debt, your court costs, your warrant cost and interest (if prescribed) from the defendant. If unsuccessful, there is no abortive fee.

OTHER METHODS…….
There are a few to choose from
• Attachment of Earnings – Defendant must be employed rather than self employed (different rules if debtor in armed services)
• Charging Orders followed by an application for an Order for Sale – a tough nut to crack when it comes to trying to get an Order for Sale – a pretty draconian measure
• Third party debt order
• Order to obtain information – this is an order that brings the Defendant into the Court for questioning about assets etc., and will help you make a decision about what to do next.
So, High Court Officer or Bailiffs!
• HCEOs normally have far higher collection rates due to the financial incentive of fees only being paid on success
• Only HCEOs have the element of surprise, as they do not need to give a letter warning of an intended visit
• Only HCEOs can force entry to commercial premises and buildings detached from residential living quarters
• Only County Court Bailiffs can enforce on judgments below £600 (at present)
• The process of gaining a Warrant of Execution (CCB) is normally a little faster than that of transferring up and gaining a Writ of Execution /Fi Fa (HCEO)
• A Warrant of Execution (CCB) costs £100
• A Writ of Execution/Fi Fa (HCEO) costs £50
• There is a £60 plus VAT abortive fee if enforcement is unsuccessful (HCEO)
• The judgment debt, interest, court fees and enforcement costs are collected from the debtor through either route
If you have a CCJ that you would like help enforcing, do please give us a call – 01202 432022.

Disclaimer: The statements and opinions expressed in this blog are those of the author and do not necessarily reflect those of Sheriffs High Court Enforcement Ltd, trading as The Sheriffs Office. Sheriffs High Court Enforcement Ltd does not take any responsibility for the views of the author. The author will not be held responsible for any comments posted by visitors to this site. Please note that this article does not constitute legal advice. The author has used her best endeavours to make this article as accurate and complete as possible, but requests that the reader be aware that the law of England and Wales frequently changes. The author strongly advises the reader to take legal advice before embarking on any enforcement action.