Bailiffs & Limited Companies: A Complete Guide to Debt Collection

October 28, 2023 / Business Insolvency

If you are not paying your creditors the money they are owed, they might consider debt collection methods. This can include the hiring of bailiffs.

Bailiffs can visit your company’s location, attempt to communicate face-to-face with directors, or even seize company-owned assets. For this reason, bailiffs are often seen as quite intimidating, and perhaps even unstoppable. However, there are limits to the powers of bailiffs, and directors of limited companies do have options available.

In this article, Clarke Bell will provide a thorough overview of bailiffs, how they can interact with limited companies, and what you can do if your company receives a visit.

If you want to sort your company debt problems, once and for all – then give us a call on 0161 907 4044.

What is a bailiff?

Bailiffs, otherwise known as Enforcement Agents, are a means of debt collection available to creditors. Bailiffs are generally employed through a private contracting company or the courts, and can be considered a third party. Creditors can employ a team of bailiffs to recover an outstanding debt that has gone unpaid, either because the borrower cannot afford repayments, or refuses to make them. Bailiffs have certain powers that allow them to perform this role, as we will discuss later.

Although ‘bailiffs’ is a commonly used term, it is more of a catch-all than a specific role. There are four types of bailiff, each with the same goal of recovering an outstanding debt:

 

  1. High Court Enforcement Agents – This type of bailiff is commonly used in the case of business debts. A High Court Enforcement Officer can be appointed after a County Court Judgment (CCJ), provided the debt owed is greater than £600. These agents have more authority than most other bailiffs, as they are directly appointed by the courts and essentially work with a legal mandate. High Court Enforcement Agents are not typically the first port of call, and are mostly used in difficult cases that have escalated beyond other options.
  2. Certificated Enforcement Agents/Civil Enforcement Agents – Civil Enforcement Agents are not commonly used in business, other than to recover tax debts owed to HMRC. These agents often work on behalf of a local Council to collect Council Tax arrears, parking fines, and other such debts.
  3. County Court and Family Court Bailiffs – These two types are quite different, but fall under the same category as they are appointed by the courts. County Court Bailiffs usually recover unpaid CCJs, while Family Court Bailiffs focus on child maintenance arrears.
  4. Civilian Enforcement Agents – The final type of bailiff collects debts that arise due to criminal offences. This can include unpaid legal fees, fines and penalties, and payment orders given in civil court cases.

 

Is there a difference between bailiffs and other debt collectors?

Bailiffs and debt collectors are sometimes used interchangeably, but both terms describe two very distinct roles. Bailiffs are mostly appointed by the courts as a result of legal action. Once appointed, these bailiffs inherit a degree of authority from the courts, allowing them to perform their role decisively. With this authority, bailiffs are capable of directly visiting a company’s location, demanding repayment, and possibly seizing assets.

Debt collectors, while similar, work differently from bailiffs. Where bailiffs have a legal authority bestowed by the courts, debt collectors do not. They operate in a purely private capacity, and cannot usually force entry into a property or seize any assets without official court approval, or the express consent of the borrower. As such, the scope of what a debt collector can do is quite limited.

Has your company received a letter or a visit from a bailiff?

Bailiffs can pose a serious threat to your company’s finances, and may even threaten your personal finances in some cases. As such, it is crucial that directors act swiftly if bailiffs get involved. If you have received a letter or a direct visit from a bailiff, obtaining professional advice is a great idea if you are unsure what to do next.

Clarke Bell has a wealth of experience in helping companies in precisely this position. Our team of experts has successfully helped companies out of financial difficulty for more than 29 years, and we can do the same for you.

If you would like any advice regarding your situation, contact us on 0161 907 4044.

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The powers of a bailiff

Bailiffs have a court-appointed status. This affords them certain powers that other debt recovery agents lack, giving them more options for forceful debt collection. The main powers afforded to bailiffs fall into two main categories:

  1. where and when they can enter
  2. what they can take

Do bailiffs have power of entry?

As bailiffs have the backing of the courts, they do have power of entry. Bailiffs can attempt entry into a property on their first visit, with or without the owner’s consent. If the owner does not consent, or is not present at the property, bailiffs are entitled to force an entry if they choose.

Bailiffs won’t come unannounced, however. Company directors should receive an enforcement notice at least seven full days before the bailiffs plan on visiting, and the visit should be conducted between the hours of 6 a.m. and 9 p.m.

Can bailiffs enter my home?

As with company premises, bailiffs can enter a private home if it is attached to a debt. For example, if company directors have signed a personal guarantee and cannot afford to repay, then bailiffs may attempt to collect the debt from directors instead. However, as private dwellings differ from company locations, certain rules must be followed.

Before entering a private dwelling, bailiffs require a “warrant of execution”, which acts as an official court order. This document allows bailiffs to enter a home, but bailiffs must have it on their person before entering. Occupants are entitled to demand evidence of this warrant, and bailiffs must comply before they can enter. To avoid any conflict, bailiffs will typically be accompanied by one or more police officers during this process.

Can bailiffs enter my home if I’m not there?

Bailiffs generally require the presence of an occupant before they can enter a home. Most bailiffs want to explain the situation to a debtor in person, gain their consent to enter the home, and then carry out their task. However, there are exceptions to this.

If bailiffs have a court order, they can enter your home with or without your presence. Some bailiffs may choose not to do so for the first visit or two, but they will eventually force an entry after repeated attempts. Another exception is a peaceable or peaceful entry.

What happens if bailiffs gain peaceful entry?

Bailiffs can attempt a peaceful entry if they suspect a debtor has intentionally left the home to avoid debt collection. In this case, bailiffs can look for an unlocked door or window to gain a peaceful entry.

Once bailiffs have gained a peaceful entry, they will typically only draft a list of what assets could be seized as repayment on subsequent visits. Some vital assets, such as clothing and workplace equipment, are not eligible for seizure. Any assets that are seized must be marked with a notice stating that the asset has been seized as repayment. If the debtor ignores this notice, it can result in legal penalties. However, bailiffs must exercise caution in their visits, and cannot cause any property damage whatsoever. If damage is caused, the homeowner may be able to take legal action.

Can bailiffs take my car?

While somewhat uncommon, bailiffs are able to take your car in certain circumstances. Following the rule of not causing undue financial hardship to a debtor, bailiffs cannot take a vehicle if it is essential to transport. For example, taking a car used for work commutes would violate this rule. Additionally, bailiffs must obtain evidence of ownership before even thinking about seizing a vehicle. Lastly, if a vehicle has been adapted to assist people with a disability, bailiffs cannot seize it. If your car does not fit these criteria, then bailiffs may be able to take it.

What can bailiffs take?

Bailiffs can take quite a wide array of assets, with certain limitations being imposed in some scenarios. When visiting company locations, there is very little off the table. Bailiffs can take almost any asset directly owned by the company, from equipment to furniture. However, bailiffs won’t generally seize assets on the first visit, instead preferring to document what can be taken later on. This gives directors some time to work out a repayment agreement, or seek professional advice.

In private dwellings, bailiffs must take a more restrained approach. Non-essential items, such as jewellery, electronics, and luxury furniture will be prioritised. Note that bailiffs will generally prefer high-value assets in small quantities, rather than lower-value assets in high quantities. Quite like with companies, bailiffs will typically avoid seizing assets on the first visit, giving debtors a chance to reach a repayment agreement and retain ownership over assets.

What can’t bailiffs take?

Bailiffs can take quite a wide range of assets, though they do have certain restrictions. These restrictions can be boiled down primarily to two categories: assets not fully owned by the debtor, and vital assets. The first is self-explanatory; if your company leases a piece of equipment from a third party, then bailiffs cannot seize it. This also includes items owned by children, such as games consoles or a phone.

The second category is essential assets. This refers to assets vital to a debtor’s personal finances, such as a vehicle for commuting or work tools, or assets needed to live. The latter refers to assets such as heating and lighting, medical equipment, cooking appliances, and basic furniture.

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Costs of using bailiffs

Bailiffs can get pretty expensive, with repeated visits increasing overall costs. In most cases, bailiffs will have two sets of costs: one or more set fees, and a percentage of debts over a certain figure. This figure is usually £1,500, though it can increase depending on the specific bailiff. For High Court Enforcement Officers, these costs are typically notably higher.

As a general rule, High Court Enforcement Officers are more expensive than other bailiffs. High Court bailiffs can charge you for multiple visits, for the sale of your assets, and if you break an agreement. They can also charge you a compliance fee, if they are collecting for multiple debts. Non-High Court bailiffs are cheaper; they can’t charge for more than one visit, can’t charge for agreements, and generally have cheaper rates and fewer fees.

Resolving a debt with bailiffs

If you have received a visit from a bailiff, it is possible to retain ownership of your assets. There are methods available to resolve a debt, resulting in bailiffs leaving your assets where they are. However, while it is possible to reach a resolution, you need to take action immediately. Waiting too long will result in your assets being seized, whether you can use other methods or not.

Can I use a payment plan?

Payment plans are one method of resolving a debt with bailiffs. Ultimately, bailiffs and debt collectors don’t want to take your assets; their job is simply to ensure their client’s debts are paid. If you are willing to negotiate in good faith, there is a very good chance that you can reach an agreement. This can be accomplished by offering to make lump sum payments, or by offering a monthly repayment plan.

Can bailiffs refuse a payment plan?

Bailiffs can refuse a payment plan, and may even refuse attempts at negotiation entirely. Refusals will typically be due to suspicions that your company cannot afford the suggested repayment plan, but there are cases where bailiffs will act arbitrarily. If you have a viable repayment plan, you can negotiate directly with your creditors, rather than through the bailiffs.

Will bailiffs give up?

Some directors may be tempted to wait it out, hoping time resolves the issue. Unfortunately, this will not be an effective solution.

Bailiffs have no limitations on the number of times they can pay your company a visit. Additionally, some bailiffs can charge a fee for each visit, meaning there is no incentive for them to drop your case.

If negotiating a payment plan isn’t possible, there are other options available; don’t try to let the situation resolve itself.

Using insolvency procedures

If your company has received a visit from the bailiffs, but you can’t afford to sign a repayment plan, insolvency procedures may be a solution. Creditors’ Voluntary Liquidation, for example, could be a good solution.

Creditors’ Voluntary Liquidation (CVL) is a formal insolvency procedure for insolvent companies. It provides directors of struggling companies an efficient path to liquidation, with a series of strong benefits. Directors can initiate the procedure with at least 75% of the board’s approval, and the appointment of a licensed insolvency practitioner to the role of liquidator.

Once in this role, the liquidator will document the company’s assets, dispose of them for the best possible price, and distribute the proceeds amongst creditors. After all possible distributions have been made, the company will be wound up and removed from the Companies House register. If any debts exist after this point, they will be written off, except those secured by personal guarantees.

For a more detailed look at Creditors’ Voluntary Liquidation, read our complete guide to the procedure.

Clarke Bell can help

Managing a company in a difficult financial position is never easy. This scenario becomes all the more difficult when bailiffs get involved. If left unchecked, bailiffs can damage your company’s finances through the seizure of assets and possible reputational damage. For companies close to the edge of insolvency, this can be enough to finish them off.

A visit from the bailiffs isn’t the end of the line. While certainly a serious problem, you still have options at your disposal. Clarke Bell can help you identify and implement these options.

We have more than 29 years of experience in helping struggling companies find the best path forward, and we can do the same for you.

Contact us today for a free, no-obligation consultation and find out what we can do for you.