What Is a Stay of Execution?
A Stay of Execution allows you to halt the proceedings of a County Court Judgement while the court makes a decision on your debt.
Creditors may take out a CCJ if you fail to repay your debts when they’re due – this can result in High Court Enforcement Officers (or bailiffs) being sent to seize your assets.
If you’re an individual or business owner struggling to repay your debt, a Stay of Execution can give you the time you need to get your affairs in order.
In this guide, we’ll explain how you can apply for a Stay of Execution and what alternative options are available.
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How Do You Apply for a Stay of Execution?
There are two ways in which you can apply for a Stay of Execution.
Submitting an N245 Form
You’ll need to give a transparent account of your financial situation, covering your income, living costs, and debts. This is used to help justify your proposed repayments, while demonstrating that you’ll be able to keep up with the plan.
Your creditor will then consider the offer and whether to accept it. If they reject it, the court will decide on a fair repayment amount.
It costs £14 to submit an N245 form to court.
Submitting an N244 Form
You must file your application within 14 days of receiving the CCJ. If accepted, you’ll be granted a private hearing where a judge will listen to why you think the debt is illegitimate.
Remember that you can’t just file an N244 because you disagree with the debt – you’ll need to prove it shouldn’t be your responsibility to pay it. For example, the debt might belong to someone else.
If the court agrees the debt is illegitimate, the CCJ will be cancelled before being removed from your credit score.
It costs £275 to submit an N244 form to court.
Will I Be Protected While the Court Considers My Application?
When you apply for a Stay of Execution, and it is pending a court verdict, the debt will still be active. This means that debt-recovery action can still be taken against you from the time the application is submitted and the date the courts reach a decision.
If you’re worried about the bailiffs showing up while you wait for the court to reach a decision, there are a few things you can do.
Make sure you keep a copy of your Stay of Execution application to hand. You can then show it to any High Court Enforcement Agents that might turn up looking to seize your goods. Once they’ve seen your application, most bailiffs will wait until the court has reached a decision to avoid any complications down the line. However, some may still take action.
To ensure complete protection against enforcement officers, you can apply for an interim Stay of Execution. If granted, this will guarantee you’re protected from any debt-recovery action until the court reaches its verdict. You can apply via a Small Claims Court; usually, you can do this without a hearing.
The Breathing Space Scheme
If you’re an individual struggling with personal debt, you can always consider taking advantage of the government’s breathing space scheme.
This will stop creditors from contacting you, adding further interest or charges on your debts, or pursuing debt-recovery actions for 60 days. You can use this time to get advice and seek a solution to your debt problems, such as an IVA.
Remember that this scheme is only available to individuals struggling with personal debt. Business owners unable to repay company debt cannot apply.
What Happens When a Stay of Execution Is Accepted?
This depends on the type of application you’ve made.
If you applied to adjust your CCJ payments with an N2445 form, you’ll have to start paying the new agreed-upon instalments. As long as you keep up with these payments, you’ll be safe from any debt collection efforts. If you miss any, bailiffs will once again be able to come and seize your goods.
If your application to dispute the debt via an N244 form is accepted, the CCJ will be temporarily stopped while you and your creditor have your private hearing. If the hearing rules in your favour, the CCJ will be cancelled.
What Happens When a Stay of Execution is Rejected?
If your Stay of Execution is rejected, you’ll remain responsible for paying the debts outlined in your CCJ, and debt-recovery efforts can again be made against you.
If this is the case, you should consider entering into a formal insolvency procedure. There are a few different solutions available to help you. These vary based on whether you’re suffering from personal debt or corporate debt.
Personal Debt Solutions
Individual Voluntary Arrangement (IVA)
If you’re struggling with unmanageable debts but have assets you want to protect, an IVA is your best option.
An alternative to bankruptcy, IVAs are a contract between you and your creditors, allowing you to repay your debts over a 5-year period:
- Protects your home and vehicle
- Freezes interest and charges on your debts
- Makes debt repayments affordable for you
- Prevents creditor action
Our team will create a plan tailored for you, allowing you to repay your creditors without having to push yourself over the brink.
Corporate Debt
Company Voluntary Arrangement (CVA)
If your business has a steady source of revenue but is being swamped by historic debts, a Company Voluntary Arrangement can offer a way back to financial stability.
CVAs allow business owners to deal with debt without resorting to closure, allowing you to repay debts gradually over 3-5 years:
- Significantly reduces overheads
- Freezes interest and charges on debts
- Offers legal immunity from creditors
Each CVA is unique, taking your company balance sheet into account to ensure the plan is sustainable and affordable.
Creditors’ Voluntary Liquidation (CVL)
Although it might not seem appealing, sometimes liquidation is the best option for a company to take.
Many directors continue to trade in the hope of turning things around, but this often results in the company’s finances continuing their downward spiral. In turn, this can result in misfeasance and wrongful trading charges, making directors personally liable for company debts.
A CVL offers a safe exit from the business:
- Allows directors to uphold their legal duties
- Relieves pressure from creditors in as little as 14 days
- Allows employees to claim redundancy quicker
- Liquidation proceeds usually cover fees
A CVL can allow you to move on to your next venture without worrying about any unwanted legal or financial fallout.
Speak to an Expert
If you’re struggling with debt, you should get in touch with an insolvency practitioner as soon as possible.
Our team can assess your situation to let you know your best option going forward; you may be able to work out an informal agreement with your creditors, or you may find you need the assistance of a formal insolvency solution.
Contact our team to book a free consultation today.
