If you’re looking to reclaim your companies debts or personal debts, it can be quite hard to understand some of the legal jargon and terminology which is thrown at you.
It’s why we always recommend that you consult a legal expert as there can be many complications in the law, the terms used and they have the reassuring expertise to advise you during the process.
We’ve therefore created this handy debt jargon buster article to help clarify this area of law.
Creditor:
This is you! A Creditor is the person or company that is owed money.
Debtor:
This is the person, company or organisation who owes the money.
Trace:
A Trace may be required to identify the current location of a Debtor or to assess their assets. A Trace may involve the vigorous search of various databases, social media, telephone and financial databases.
Letter Before Action:
This is the initial letter sent out by the Solicitors on behalf of the Creditor. It sets out information regarding how and when the Debt has arisen, the total amount of the Debt including interest, and what will happen if the Debt is not paid in a timely manner.
Pre-Litigation:
These are the steps that are taken by the Solicitor before Court Proceedings are issued in order to make the Debtor settle the Debt. This may consist of a Trace, the Letter Before Action, phone calls and emails.
Court Proceedings:
Should the Debtor fail to respond to the Pre-Litigation work, it may be necessary to start Court Proceedings against them. This will involve filing a Claim Form with the Court. The Court will then serve a Summons on the Debtor with strict time frames of when the Debtor should respond by. Failure to do so could result in a County Court Judgment being entered against the Debtor.
County Court Judgement:
This is Court Order that states that the Debtor must pay a sum of money to satisfy the claim. In the absence of a response from the Debtor, the Creditor and/or their Solicitors can proceed to enforce the Judgment.
High Court Enforcement Officers:
If you have an unsatisfied Judgment against a Debtor, instructing a High Court Enforcement Officer may be the best course of action. They will attend the Debtor’s house or premises to request settlement of the amount as stated within the Court Order. If the Debtor is unable to settle the full amount, they may be able to remove the Debtors property to the value of the Judgment.
Charging Order:
If the Debtor has not settled the amount of the claim as stated within the Court Order, it is possible to apply to the Courts for a further Order which states that the property of the Debtor stands charged with the payment of the amount which is outstanding. If the Debtor comes to sell the property, the outstanding amount of the charge on that property must be discharged.
Attachment of Earnings:
This is where a further Court Order is obtained in order to recover payments towards the outstanding Judgment amount, directly from the Debtors employers. The money is paid at Source by the employer and does not reach the Debtor.
Third Party Debt Orders:
This is a Court Order that prevents the Debtor obtaining money from their bank or building society account. The outstanding Debt is then paid to the Creditor from the Debtors account.
Winding up:
This requires a Court Order that can be applied to the Debtor when they are a company. It forces the company into compulsory liquidation. The Courts will then appoint an Official Receiver to liquidate the company’s assets in order to repay Creditors.
Bankruptcy Petitions:
This is a Court Order declaring a person bankrupt and placing their affairs under the control of a Receiver or Trustee.
