Judgment debt
Disputes & Litigation

A judgment debt is a chose in action representing the sum comprised of damages, an account of profits, costs orders and any other monetary sum arising from an order of a court. The benefit arising from a judgment debt may be assigned prior to the making of the order giving rise to the debt provided that the person receiving the assignment does not have right to interfere or influence the conduct of the proceedings.

Judgment debts may be assigned to third parties provided that the assignment is in writing under the hand of the judgment creditor; the assignment is absolute, and not simply a charge; and notice of the assignment is given to the judgment debtor.

The debt may also be assigned in equity, where the evidence shows a clear intention to assign the benefit of the judgment debt to the assignee. The person receiving the benefit of the assignment must join the original judgment debtor to the enforcement proceedings, as the assignment was made in equity and not at law. The assignment may or may not be supported by consideration provided the assignment is effective in equity.

Once the assignment has taken effect by notice to the judgment creditor, the person to whom the debt has been assigned holds all of the powers of enforcement and remedies to execute the judgment debt that were vested in the original judgment creditor, and may do so without reference to the original creditor, and enforce in its own name.

For the purposes of debt recovery, lawyers may be engaged to assign the debt for a value less than the actual judgment debt; the consideration supporting the transaction being the expense, potential delay and uncertainty of recovery of the debt.