Debt Recovery: A Case Study

Mr. and Mrs. Price had newspapers delivered to their home for many years. Every few weeks Mr. Price would go to the newsagents and settle the account. Then one month, for no apparent reason, Mr. Price didn’t settle the account.

The newsagent thought that he must have forgotten, so he continued to allow the paperboy to deliver the papers to their home. Although Mr. Price continued coming to the shop to buy other small items, he never mentioned the papers to any member of staff at the newsagents.

The Debt

After three months had gone by, the newsagent wrote a letter to Mr. Price by way of a gentle reminder. He received no response, and it was just after this that he noticed that Mr. Price stopped coming into the newsagents to buy things. Two weeks after that, the newsagent sent another letter which stated that he would need the outstanding bill to be settled soon otherwise he wouldn’t be able to continue delivering papers to the family’s home.

The newsagent was reluctant to make forceful demands in the letter because he didn’t want to upset Mr. and Mrs. Price, who had been his customers for many years. However he was becoming frustrated as the bill was now just over £104, and albeit not a huge sum overall was the largest outstanding bill he had ever had.

The Small Claims Court

The newsagent didn’t think it was worth going to see a solicitor so he lodged a claim in the small claims court to recover the debt. Mr. and Mrs. Price did not acknowledge service or serve a defence within the timescale, and the newsagent had read that he could apply for ‘summary judgment’. This would allow the judge to decide the case on the facts alone without requiring a full hearing. The newsagent’s application was successful and judgment was entered against Mr. Price for the sum of £104 plus costs.

Enforcing the Judgment

The newsagent soon found out that it was one thing obtaining a county court judgment against Mr. Price, but obtaining the money was going to be another thing altogether. He researched the various ways in which he could go about trying to enforce the judgment. As he knew that Mr. Price worked at a local garage, he applied to the county court for an attachment of earnings order (AEO), but then found out that Mr. Price had been made redundant.

He then decided to apply for a third party debt order (TPDO) using the information he had from cheques that Mr. Price had previously used to settle his newspapers account. However this account was vastly overdrawn, which meant that the newsagent could not freeze money from the account. Another account had money in it, but as it was in joint names with Mrs. Price he could not enforce the debt this way.

Getting the Money Back

Unfortunately the debt was too small to enforce against Mr. Price’s home, and was not sufficient on its own to make Mr. Price bankrupt. However, the newsagent was able to employ the services of a bailiff who executed a warrant at Mr. Prince’s premises and seized goods, which were then sold at auction to settle the debt.