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£6 A Month Instalments!? We Won’t Be Paid For 15 Years: Thanks Judge!

Reasons to choose Wilson Browne

My busy debt collection department usually successfully obtains a judgement against debtors…

… but sometimes find that a debtor has made an application to the court decided on paper for payment to be made in instalments rather than in a lump sum.  A sympathetic and generous District Judge orders that the judgement should be paid in ridiculously low instalments, which might mean that it would take many years for the debt to be paid. The good news is that a creditor does not need to just accept this outcome.

The recent decision of the Court of Appeal in Loson v Brett Stack is very helpful to judgement creditors as it provides that in a case such as this; where the debtor claims they cannot really pay anything, or it will take years to pay off the debt, the correct course is for the court not to interfere with the judgement creditor’s right to seek enforcement of the judgement by whatever means are available to them and which they choose to adopt.  Put another way, it’s not for the Court to impose an order to stop a creditor threatening or enforcing bankruptcy, charging orders, third party debt orders or other means of enforcement.

Although there’s a power available to the court under Civil Procedure Rule 40.9 A for the judgement creditor to obtain an order that the judgement be paid in instalments rather than by a lump sum, this power does have to be exercised by judges in a way which properly respects the rights of the creditor which have been vindicated by the judgement the court has already made in their favour.

In Loson, the Court of Appeal emphasised that an instalment order must be by way of a “realistic repayment schedule backed up by evidence that the creditor can be expected to receive the amount of principal and any interest within a reasonable period of time. To that extent the interests of the creditor will be paramount.”

So the message is clear, don’t accept the imposition by a generous district judge of a ridiculously long payment plan. If the order made has resulted in no realistic prospect of your debtor discharging any significant part of his or her  liability in the reasonably near future, or at all, then return to court and apply for the instalment order to be discharged.

Our Legal 500 recognised Commercial Litigation Team lead by John Gordon can assist with the process of reviewing and applying to the court to set aside any instalment order.

If you need any advice give us a call.