For a debt awarded in the county court against an individual, the creditor can apply for an Attachment of Earnings Order (AEO), whereby a set amount, as set by the court, will be deducted from the debtor’s salary every month until the debt is repaid.
The employer will then pay the required amount directly to the court, which will then transfer the money to the judgment creditor.
An AEO cannot be made against a member of HM Armed Forces, nor can it be applied to disability payments or social security benefits. It also cannot be used against a person who is self-employed or a partner who takes his share of profits through drawings on account.
Earnings are defined as anything paid to the employee as wages or salary, so this would include overtime, bonuses and commission payments, statutory sick pay and pension payments, including annuities.
When you might consider using an AEO
The threat of their employer finding about the CCJ through the order may be enough to encourage the debtor to pay the creditor. The debtor has 14 days from the date the order is awarded to arrange an alternative method of payment. If this is satisfactory to the creditor, then he will suspend the order until the payment is made in full.
If you know that the judgment debtor has a high salary or pension, then this might be a good route. However, it is worth considering the long term employment prospects of the debtor, particularly given the current state of the economy and job market.
What if they lose their job?
Once the debtor loses their job, the payments will stop until the debtor finds a new job, when the creditor can apply for payments to start again. But there is no way of telling when they will find a new job, particularly given that they have a CCJ against them.
If you suspect that the debtor has found a new job but has not declared it, you can apply to the court to order the debtor to file a statement of means.
Can you combine it with other forms of enforcement?
HMRC’s guidelines are that other forms of enforcement should be tried first before applying for an AEO.
The Attachment of Earnings Act 1971 states that “so long as the [attachment of earnings] order is in force, no execution for recovery of the [judgment] debt shall issue against any property of the [judgment] debt without the leave of the Country Court.”
Therefore using an AEO may preclude other forms of enforcement such as a writ of control (formerly a writ of fieri facias or fi fa), warrant of execution, third party debt order or charging order.
The pros and cons
- As long as the debtor is employed, the money is deducted automatically
- The threat of the order may be sufficient to gain payment
- You cannot undertake other forms of enforcement at the same time as an AEO
- If the debtor loses their job and cannot find another, then you will receive no further payment
- The debtor must have been sued as an individual
- The court will decide the amount to be deducted each month
- It can only be used when the debtor is on PAYE
My advice, therefore, would be to pursue other forms of enforcement first, and only if they are unsuccessful, to then apply for an AEO.
Naturally, my first recommendation would be to transfer the judgment to the High Court for enforcement by an HCEO, as we believe this is the most effective method!