Services / Enforcement and asset recovery
Tracing a debtor's assets through the court
Many creditors stop at not knowing what the debtor has, although the statute provides a tool aimed squarely at that question, and one usable from a position of knowing nothing at all.
The tool the statute provides
The first paragraph of section 277 of the Civil Procedure Code provides that in enforcement, where the judgment creditor has reasonable grounds to believe the debtor has more property liable to execution than it knows of, or has property liable to execution whose location it does not know, or where there is reasonable doubt whether particular property belongs to the debtor, the creditor may apply ex parte by petition for the court to hold an inquiry.
What the court may do
The second paragraph empowers the court to summon the judgment debtor, or any other person believed able to give useful evidence, to attend in person for the inquiry, and to order that person to produce documents or objects in their possession or control relating to the debtor's property. The reach is therefore wider than the debtor alone and extends to those who know about the debtor's assets.
The three situations it covers
The wording of the first paragraph covers three distinct situations: believing there is more than is known, knowing there is property but not where it is, and doubting whether property in view really belongs to the debtor. The third is particularly useful where a debtor uses assets registered in someone else's name, a common pattern that a register search alone will not reveal.
It works alongside register searches
An inquiry under section 277 does not replace searches of the public registers; it is for when those searches run out, or when what they show conflicts with what can be observed. A petition should therefore show the court what has already been done and where the reasonable grounds come from, rather than being filed on nothing.
The clock behind all of it
Tracing always runs inside the ten years set by section 274. Letting years pass without acting therefore has a hidden cost: assets found late, with the period nearly gone, may not leave time to seize or attach them. Starting early is worth more than starting when convenient.
PREPARE
What to bring
- The judgment and the order for compliance
- The debtor's identifying details, personal or company number
- The results of any register searches already carried out
- Details of assets observed but not yet traced to an owner
- The names of anyone likely to know about the debtor's property
QUESTIONS
Questions this raises
My own searches found nothing. Is that the end?
Not necessarily, because section 277 is aimed at precisely this: believing there is more than is known, or not knowing where it is. What has to be assembled is the reasonable ground, which may come from how the debtor lives, a business still trading, or entries in older documents.
The debtor uses property registered in another name.
The first paragraph of section 277 expressly covers reasonable doubt whether particular property belongs to the judgment debtor, and the second allows the court to summon others and order production of documents. There is therefore a route, but the material grounding the doubt has to be put before the court first.
LAW
The legislation
- Civil Procedure Code, sections 274 and 277
ENQUIRIES
