Debt Collection Agencies v High Court Enforcement Officers

When a business looks for external assistance in recovering debt, it will often naturally turn to a commercial debt collection agency (DCA) for help. Some DCA’s can be very effective and there is definitely something to be said for externalising parts of the debt collection process. However, in the more difficult cases where debtors fail to respond to letter and telephone techniques, DCA’s can be have little effect.

In this article, we explain the difference between Debt Collection Agencies and High Court Enforcement Officers and the application that both can have in a debt recovery strategy.


Debt Collection Agencies

DCA’s are often the first port of call when a creditor looks to instruct in relation to a non-paying customer. The approach of DCA’s will vary. Some DCA’s provide Sales Ledger Management services, often seen as ‘early-stage’ collection of unpaid invoices. This ‘soft collections’ approach can be employed where the client is keen to maintain a relationship with its customer.

Other DCA’s will adopt a more forceful approach, which may involve a legal service offering – with the issue of letters before action and legal proceedings via a solicitor.

Using a DCA can often bring about a successful result but unless the DCA can offer litigation and enforcement services, prospects of recovery from the more intransigent debtor can be slim!


High Court Enforcement

Using High Court Enforcement Officers (HCEO’s) is a post-litigation debt recovery method. HCEO’s enforce judgments and act under a High Court writ. When enforcing a judgment under a writ, an HCEO has the power to seize (and if necessary remove) assets to recover a judgment debt.

The primary advantage of an HCEO is that the debtor (or the ‘defendant’ under a judgment) is liable to pay the costs of enforcement; which means that HCEO’s generally do not charge a commission in the way that DCA’s generally would.

Using HCEO’s to enforce a judgment can be particularly effective as against commercial debtors since an HCEO has the power to force entry (if necessary) to commercial premises in order to seize goods. When faced with the prospect of losing business critical assets/stock, even the most difficult debtors will try to find a way to pay or will enter into a payment arrangement.

Of course in order to use an HCEO, the creditor will need to have been awarded judgment. Many of our clients will engage solicitors to do this for them – many of whom will act on very competitive fixed fee arrangements. Some of our clients even undertake the process of issuing judgments themselves and the Court Service operates an online method for doing this via Money Claim Online (www.moneyclaim.gov.uk). With 80-90% of cases being undefended, the process of getting judgment can often be quicker and much less costly than you might think.

Both DCA’s and High Court Enforcement Officers have their applications and which one is right will often depend on the relationship you have with the customer. For advice on external debt collection options, including litigation and enforcement, contact the Burlington Client Service Team on 0330 900 8000.