N39 ORDERS

N39 ORDERS : A CREDITORS GUIDE

Welcome to Tracenet Legal Services. Since 2015, we have managed and effected the service of thousands of N39 Orders upon judgment debtors across the Country.

We are a multi-award-winning and industry-leading UK Process Server providing business-to-business litigation, Insolvency, & Recovery Support Services directly to UK Debt Recovery professionals and Legal Teams.

If you need assistance in arranging the service of an N39 Order, please call us on 0800 048 5684 or contact us for a fixed fee, Nationwide service.

1. INTRODUCTION

In the world of debt recovery and enforcement, creditors often face significant challenges in locating assets or gaining clarity on a debtor’s financial position.

The N39 Order to Attend Court for Questioning, also known as an Order for Examination of a Debtor, is a legal tool designed to address this issue. This court order compels a debtor to appear in court and disclose details about their income, assets, and liabilities, providing creditors with valuable insight into their financial standing.

For creditors, an N39 Order is a powerful enforcement mechanism that can help identify avenues for debt recovery.

However, the process of obtaining and enforcing such an order is steeped in legal intricacy, requiring careful adherence to UK insolvency law.

This guide explores the purpose, legal implications, and procedural steps involved in securing an N39 Order, offering creditors a detailed understanding of this critical legal remedy.

2. WHAT IS AN N39 ORDER TO ATTEND COURT FOR QUESTIONING?

An N39 Order is a court order issued under Part 71 of the Civil Procedure Rules (CPR). It mandates that a debtor appear before the court to answer questions about their financial situation under oath.

The purpose is to allow creditors to uncover information about the debtor’s assets, income, and expenditures, which may aid in the enforcement of a judgment debt.

The court’s power to issue this order stems from its authority to compel compliance in judgment enforcement proceedings. It is particularly useful when other enforcement methods, such as bailiff action or attachment of earnings orders, have proven ineffective.

Contents

1. Introduction

2. What is an N39 Order to Attend Court for Questioning?

3. Purpose of an N39 Order

4. How to Obtain an N39 Order

5. The Role of Personal Service and Process Servers

6. Sworn Affidavits and Compliance with Court Rules

7. Relevant Legislation

8. Implications of Non-Compliance

9. FAQs

10. Example Case Study

11. Conclusion

3. PURPOSE OF AN N39 ORDER

The primary objective of an N39 Order is to:

• Assist creditors in identifying recoverable assets: The debtor may disclose property, savings, investments, or other assets that can be used to satisfy the debt.

• Facilitate debt recovery efforts: By examining the debtor’s financial situation, creditors can determine the most effective enforcement method (e.g., charging orders or third-party debt orders).

• Encourage compliance: The obligation to attend court under the threat of penalties for non-compliance often motivates debtors to engage in settlement discussions or payment plans.

4. HOW TO OBTAIN AN N39 ORDER

To obtain an N39 Order, creditors must follow a structured legal process:

1. File an Application (Form N244): Creditors must complete and submit an application form supported by evidence of the outstanding debt and previous enforcement efforts.

2. Request a Court Hearing: The court will schedule a hearing to consider the application.

3. Demonstrate the Need for Examination: Creditors must show that questioning the debtor is necessary to identify assets or clarify financial details.

4. Obtain the Order: If the court is satisfied, it will issue the N39 Order, requiring the debtor to appear at a specified time and place.

5. Serve the Order: The order must be personally served on the debtor, ensuring they are fully aware of the obligation.

5. THE ROLE OF PERSONAL SERVICE AND PROCESS SERVERS

Personal service is a fundamental requirement of the N39 Order process. This ensures that the debtor is fully aware of the order and its implications. If the order is not served properly, the court may dismiss the application or postpone proceedings.

• Why Personal Service Matters: Personal service guarantees that the debtor receives the order directly, eliminating disputes over notification.

• Role of Process Servers: Engaging professional process servers ensures compliance with service requirements. These experts are experienced in locating and serving individuals, especially those who might evade notification.

• What Happens If Personal Service Is Not Possible: If personal service cannot be completed despite reasonable efforts, the creditor must apply to the court for alternative service methods, such as postal service or email.

6. SWORN AFFIDAVITS AND COMPLIANCE WITH COURT RULES

After serving the N39 Order, the creditor or process server must submit a sworn affidavit or Certificate of Service to the court. This document provides evidence of the service, detailing:

• The date, time, and place of service.

• The method of service used.

• The identity of the individual served (with proof if applicable).

Failure to provide a sworn affidavit may lead to delays or dismissal of the case, emphasizing the importance of meticulous compliance with procedural rules.

7. RELEVANT LEGISLATION

N39 Orders are governed by several key pieces of legislation:

• Civil Procedure Rules (CPR), Part 71: Establishes the framework for obtaining and enforcing N39 Orders.

• County Courts Act 1984: Grants courts the authority to compel debtors to disclose financial information.

• Debtors Act 1869: Addresses penalties for non-compliance with court orders, including possible imprisonment for contempt of court.

8. IMPLICATIONS FOR NON-COMPLIANCE

If a debtor fails to comply with an N39 Order, the consequences can be severe:

• Contempt of Court: The debtor may be held in contempt, which can result in fines or imprisonment.

• Warrant for Arrest: The court may issue a warrant to arrest the debtor and compel their attendance.

• Adverse Outcomes: Non-compliance can escalate legal proceedings, resulting in higher costs and more aggressive pursuit of assets.

For creditors, these consequences can serve as leverage, motivating the debtor to engage in meaningful negotiations or repayment.

9. FAQS

1. Who can apply for an N39 Order?

Any creditor with a valid judgment debt against a debtor can apply for an N39 Order to uncover financial information.

2. What happens at the court hearing?

The debtor is questioned under oath about their finances, and the creditor can gain insights to enforce the debt.

3. What if the debtor refuses to attend court?

The court may issue a warrant for the debtor’s arrest, compelling their attendance.

4. Can a debtor challenge an N39 Order?

Yes, they may challenge the order if they believe it was issued incorrectly or if they have valid grounds to dispute the judgment.

5. Are there alternatives to an N39 Order?

Yes, creditors may consider enforcement methods like attachment of earnings orders, charging orders, or bailiff action.

6. What documents should a debtor bring to court?

The court typically requires financial records such as bank statements, payslips, and property documents.

7. Can the court question a company director under an N39 Order?

Yes, in cases involving corporate debt, company directors can be questioned about the company’s finances.

8. How long does it take to obtain an N39 Order?

The process can take several weeks, depending on court schedules and the complexity of the case.

9. Is there a cost to applying for an N39 Order?

Yes, creditors must pay a court fee when filing the application.

10. What if the debtor provides false information?

Providing false information under oath is perjury, a criminal offence punishable by fines or imprisonment.

10. EXAMPLE CASE STUDY

Case Study: Recovering a Business Loan with an N39 Order

A creditor, XYZ Finance Ltd, obtained a judgment against a debtor who defaulted on a business loan. Despite repeated attempts at enforcement, the debtor claimed to have no assets. XYZ Finance applied for an N39 Order, compelling the debtor to appear in court for questioning.

At the hearing, the debtor disclosed ownership of an undeclared investment property. This information allowed XYZ Finance to secure a charging order on the property, leading to the eventual recovery of the outstanding debt.

11. CONCLUSION

An N39 Order is a powerful tool for creditors in the debt recovery arsenal. Compelling debtors to disclose financial information under oath provides clarity on the debtor’s financial position and enables strategic enforcement actions. However, the process requires a thorough understanding of legal requirements and procedural steps. Creditors can leverage N39 Orders to achieve effective debt recovery and secure favourable outcomes with the right approach.