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Insight article

January 16, 2015

What happens when you only receive part of an enforcement debt?

Circumstances can arise where you have a judgment debt and have instructed enforcement officers to seek to pursue the sums due, but in some instances, the debt is only partially recovered.

Receiving part of an enforcement debt can occur in situations where the sale proceeds did not achieve the full amount, an offer for settlement was made and accepted by the creditor, or there is a payment by instalment arrangement agreed upon.

The Taking Control of Goods Regulations 2013 have clarified the situation to work out how the part payment is allocated towards the principal sum and fees.

Where goods have been sold at auction, the funds are allocated as follows:

  • The auctioneer’s fee.
  • The compliance fee (currently £75 plus VAT) to the enforcement officer.
  • Allowable disbursements such as locksmiths, storage fees etc.
  • Balance split pro rata between the judgment debt itself and the enforcement fees.
  • When the debtor and the creditor agree on a settlement sum, the balance is split pro rata between the creditor and the enforcement fees after payment of the compliance fee.

The same applies as above when there is an instalment plan agreed upon. After the compliance fee is paid, split the sum pro rata.

In instances of co-ownership of goods, the co-owner must first receive their share of the proceeds proportionate to their ownership and split the balance as per the rules bulleted above.

If you’ve only received part of an enforcement debt and have a query, contact Laura St-Gallay today.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

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