“I lost in small claims court but cannot afford to pay”

Have you been taken to the small claims court and lost? Are you now facing a judgment to make a payment but cannot afford to do so? If you answered yes to both of these questions, this guide is for you.

We discuss what can happen if you can’t afford to pay a small claim judgment. And for personalised help or legal information, consult with a debt charity or a legal team, respectively. 

What is the small claims court?

A small claims court is a court that hears and judges on small civil cases between private parties. Claimants can claim smaller amounts at these courts, usually compensation and interest, but may be subject to expensive fees if they lose their case. 

There may or may not be a hearing to the case, depending on how the process plays out and what is decided by the judge. 

This type of court may be known by different names in the various regions or have additional functions. For example, the small claims court in one location may be a part of the county court or magistrates’ court. 

What will happen if a defendant does not respond to the small claims court?

If you have received notice that someone is taking you to court over a small claim and you ignore it, the claimant may be able to get the court to issue a judgment forcing you to pay. Therefore, doing nothing and ignoring the creditor can work against you. 

How claimants can ask the court for a judgment

If you do not respond to their claim, the claimant can ask that the courts issue you with a court order making you legally responsible to pay. The way the claimant can ask for a judgement depends on how they raised their case:

  1. Ask for a judgment online if the claim was initially made online
  2. Use Form N225 for a fixed amount
  3. Use Form N227 for an unspecified amount

They can also use the above to ask for a court order if you do respond, but in your response you admit you owe the money. 

I want to fight the case…

Alternatively, you may want to respond to the claimant and may have to attend a hearing to decide the outcome of the case. A judge will decide if any money is owed to the claiming party and issue a judgment based on their decision. If you have to attend a hearing it will be beneficial to get legal advice. 

Can you be forced to pay a judgement?

If you receive a judgment to pay and do not willfully do so after the court’s decision, you can be forced to pay. The business or person making the claim can ask the courts to collect the money from the debtor. There will be a fee for this service, but any person receiving benefits or on a low income can request that the fee is waived by completing a form. 

What happens if a defendant cannot pay a judgement?

If the judge requests the defendant to pay, you will need to pay within 14 days. If you decide not to pay because you cannot afford the payment along with essential living costs, the claimants may first try to gather information about your personal finances. This will tell them if you can afford to pay or not. 

They will do this by asking a judge to order you to a hearing where you will disclose your income and expenses to a judge. With this financial information, the claimant may decide to pursue you for the payment with enforcement action (listed below) or not chase you for the payment right now, until your finances improve. 

The court can enforce the judgment in one of many ways, using the most appropriate method based on each case. For example, they can:

  1. Use bailiffs to recover payment or goods

The court may use bailiffs to recover the money. The bailiffs will first send a letter to your address asking for the debt to be paid within seven working days of the date of the letter, also known as an enforcement notice. 

And if you don’t, they will attend your home and try to take control of assets that can be sold at auction. The money raised at the auction will be used to pay off some or all of the money owed. 

This enforcement action could be used against individuals or a limited company that owes money on a judgment. 

  1. Take money from the debtor’s wages

Instead, the court may use an attachment of earnings to collect the money from employment income. This is when the defendant’s employer is made to send a percentage of their wages to the court, which then sends the money to the creditor/claimant. They will continue to collect the debt in this way until it is all paid off. 

  1. Freeze assets

Alternatively, but less common, the court may decide to freeze the debtor’s bank account and other financial products. They will then decide if the money in any savings or bank account can be used to pay any of the debt owed to the claimant. 

  1. Use a charging order

A fourth option is to place a charging order on any land or property that the debtor owns. If the property or land is sold, the charging order will ensure that some of the income raised is used to pay the debt. The debtor may even be forced to sell this land or property to pay the debt back faster. 

Can I appeal the court order?

You may be able to appeal against the order as long as you get the court’s permission to do so. The appeal must be lodged within 21 days and will only be successful if the previous judge has made a legal mistake, which is highly unlikely. 

If you are awarded the chance to have your case looked at again, you will not be allowed to put forward new evidence. 

Contact a charity for free debt advice!

Contact a free debt charity to get legal information and help with court documents. Charities can provide exceptional support when facing court judgments and could lessen the stress of the whole process. 

And our financial blogs and guides are always just a click away, providing you with answers to the most common questions about debt solutions, income, bankruptcy and much more!

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more
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