What Is Earnings Wage Arrestment In Scotland?
Wage Arrestment is increasingly being used as a tactic to recover debts in Scotland, with unpaid council tax debt being the most common cause of a debt being enforced by way of an attachment of earnings.
With the Earnings Arrestment enforcement action type, your employer is instructed by law to deduct money directly from your wages.
As part of the ‘diligence’ process – A legal process that allows creditors to collect monies where a court order has been unsuccessful in forcing you to pay.
Before a Wage Arrestment can be put in place, you will either have had a decree awarded against you or will have received a summary warrant for the debt you owe.
Once an Attachment of Earnings is secured, your employer must deduct an amount from your net earnings over time you get paid. If it’s a council tax debt, his Wage Arrestment deduction will then be passed on to your local authority council to pay off your council tax debt.
Although most commonly used for council tax debt, wage arrestment can be used for other debts as well.
It is not necessary for the creditor to raise a court action before they serve a Charge for Payment. This is a more typical route for debts that are not regulated by the Consumer Credit Act (such as credit cards and personal loans) using the procedure known as summary diligence.
A Wage Arrestment is used to collect a single debt owed to one creditor.
Current maintenance arrestment is used to enforce the payment of maintenance, such as that awarded by a court during a divorce settlement.
Multiple Wage Arrestments
A Conjoined Arrestment Order is granted by the court to enforce payment of two or more of the same type of debts.
The important thing to remember is that a conjoined arrestment can be used for two or more wage arrestments that are in place at the same time but not for an earnings arrestment and current maintenance arrestment.
Technically, it’s possible for the local authority to issue you with an Earnings Arrestment for every year of outstanding debt as they are counted as separate debts.
However, the amount taken each month would not increase, but would instead be divided on a pro-rata basis between all debts they are chasing you for. Most Scottish councils tend to do it for one year, and when that debt is paid do it again for the next year. They would normally collect the earlier years first.
It may be worthwhile double-checking that the arrestment is legal and that the money is owed. If the creditor has not issued a Debt Advice and Information Pack (DAIP) then the procedures have not been followed correctly and you can argue that the Wage Arrestment is not legal. If you decide to pursue this, seek advice first.
Typical Wage Arrestment Example
The usual process prior to getting a wage arrestment for Council Tax debt typically follows this path:
The normal method for paying council tax is in 10 monthly instalments. If you miss a payment, the council should send you a reminder giving you seven days to pay the outstanding amount.
If you fail to pay the missing installment after a reminder, however, you will lose your right to pay by instalments.
At this stage, you will receive a final notice giving you 14 days to pay the whole amount outstanding for the remainder of the financial year.
It is still possible with some local authorities in Scotland at this stage to negotiate to pay in instalments if you contact them directly. If you are at this stage, it’s important to act as soon as possible.
Your council tax should be treated as a priority debt, alongside other utilities and your mortgage/rent so make sure you do not pay unsecured debts such as credit cards and personal loans ahead of any priority debts.
No matter what the credit card lender says, they are always a lesser priority debt to pay but that doesn’t mean you should ignore these debts either.
Firstly, try to make reasonable arrangements to pay, Second, if that fails, or you feel your debts are more severe, contact a qualified debt advisor ASAP.
If this lump sum is not paid then the council can apply to the sheriff court for a summary warrant. This is a certificate from the sheriff court stating the amount of council tax you owe.
You will not have the opportunity to negotiate with the court before one is granted. You will only know about it the summary warrant when you receive notification of it in the post. You do not have to be told that the council is applying for a summary warrant.
The summary warrant is issued by Sheriff Officers in Scotland. It will state the amount due and who to contact to arrange to pay this amount.
Your payments are no longer made to the local authority but then instead, to the Sheriff Officers.
The amount due will have increased as there is an automatic penalty fine of 10% when a summary warrant is issued.
At this stage, you can arrange to repay the money at a rate that is comfortable for you.
If you decide to do so make sure you come to an arrangement that you will be able to stick to. Remember, priority bills are more important than non-priority bills e.g. credit card debts.
It is better to pay less regularly over a longer period of time than to try to stretch yourself and risk missing payments.
Charge For Payment
A Charge for Payment is a legal document that is served in Scotland by Sheriff Officers and Messenger at Arms.
They are served to formally demand payment of money and give only 14 days to make payment.
If the Charge for Payment is not complied with there are severe consequences.
An earning arrestment as discussed, or bank account arrestment.
Or an attachment of property held on your home or other assets such as a vehicle. The most common property to be attached by Sheriff Officers are cars, however, they can attach most items that are kept outside the home or business property. Even if it is kept in business premises, garden shed.
A Charge for Payment doesn’t need to be served to execute an inhibition.
An Inhibition in Scotland is another form of diligence, which makes it a formal, legal debt recovery tool. It allows a creditor to stop you from selling your home, or re-mortgaging without paying them. It doesn’t give them the right to force the sale of your home.
This is the typical process that local authorities will pursue to enforce their outstanding Council Tax debt, but remember this can be used for other types of debts. Parking fines are another example of a creditor that uses this enforcement type.
A Charge for Payment can quickly escalate e.g. an unpaid bus lane contravention fine debt can go from a manageable £90 to almost double with a fee of £81.16 added; the same debt then becomes £171.16. This fee cannot be removed thereafter.
How Much Of My Wages Can Be Arrested?
There are rules about how much money can be taken from your wages in Scotland, and also procedures in place to govern what happens if more than one creditor tries to arrest your wages.
The earning arrestment amount taken from your wages depends on how much you earn.
In April 2019, the protected minimum balance increased from £494.01 to £529.90. The exact amount that will be reduced from your debt can be found here.
Any payments for commission, bonuses or statutory sick pay will be considered as part of your wages.
How Will My Employer React To My Wage Arrestment?
It is your employer’s legal duty to deduct whatever the courts insist on from your wages.
If an employer fails to arrest your wages once lawfully instructed by a Sheriff Officer, they can be held liable to the creditor for the amount that they should have taken off your wages.
Furthermore, they too can then be taken to court themselves and ordered to pay the amount they should have or become subject to the Sheriff Officers themselves.
For this reason, employers must arrest your wages when told to do so. Your employer can also deduct a £1.00 administration fee every time the money is taken from your salary.
Wage arrestment can be uncomfortable for you at work but it is not likely to be more than that, other than an increased administrative burden for your payroll team.
However, you may, as a condition of your employment, have a clause in your contract that states that wages arrestment is a matter for which you should be disciplined. This may more likely be the case if, for example, you work in the financial sector.
An Earnings Arrestment Order may be considered a disciplinary matter by some employers.
In some situations, you can apply to the court for a Suspended Attachment of Earnings Order. If you can supply valid reasons why the wage arrestment should be suspended, you may be able to prevent it.
One such reason to apply to the court for a Suspended Attachment of Earnings Order may be dismissal or disciplinary proceedings at work.
Any responsibly structured organisation would typically only declare a Wage Arrestment on a need-to-know basis; therefore it’s reasonable to assume that such knowledge within a workplace will not become part of the workplace gossip.
What Happens If I Change Jobs?
If you change your job during the Earning Arrestment, then your Wage Arrestment will stop, due to having no earnings for that employer to deduct your wages from. It is your duty to ensure that you inform the Sheriff Officers of your change in employment.
However, your previous employer can be instructed to supply details of your new employment to the sheriff officers where it is known. Most-likely because you had to give them as an employment reference.
The Earning Arrestment, therefore, will most likely follow you.
Can My Benefits Become Arrested?
No, if you are in receipt of Universal Credit or any other benefits, a Wage Arrestment cannot be collected from your benefits payment.
How To Prevent A Wage Arrestment Charge For Payment?
A Statutory Moratorium can be registered with the Accountant in Bankruptcy office. Typically this was provided that one has not already been registered within the last 12 months; however, this restriction has been amended due to a revision in the legislation brought about by the recent Coronavirus Scotland Bill.
This prevents creditors from taking any further enforcement action for a period of six months. Again, the Statutory Moratorium has been amended and extended recently as part of the recent Coronavirus Scotland Bill.
This is a free application process and can be done relatively quickly.
Statutory moratoriums’, however, only allow some breathing space and it is incumbent on the debtor to obtain advice to find a more long-term debt management tools such as Trust Deeds, Debt Arrangement Scheme or payment in full of the original debt.
Remember too that debt collection agencies can use suggestive words in their telephone conversations, or send letters that imply that a Wage Arrestment and/or other enforcement action is imminent against you but it may be a threat at that stage.
It is advisable that you seek advice first from an expert debt advisor, as to be most effective the procedure should only be used when it is absolutely necessary.
How To Stop A Wage Arrestment Charge For Payment?
A Statutory Moratorium should be used, even after a Charge for Payment has been served and has expired.
Again, this allows six months breathing space to allow you to pursue a more permanent solution. Whether that be looking at long-term debt management tools such as Trust Deeds, Debt Arrangement Scheme or where possible, payment in full of the original debt upon securing extra funds.
Alternatively, even after a court order has been awarded, or a summary warrant granted, you can apply for a Time to Pay Order.
A Time to Pay Order allows you to enter an installment plan with the lender, or local authority where it’s outstanding Council Tax Arrears and providing it is maintained, will prevent a Charge for Payment being relied upon for any further action.
If you want to prevent or stop a Wage Arrestment Charge for Payment, get in touch with a qualified money advisor today.
Wage Arrestment Debt Advice
If you’re worried about debts, worried about the threat of having a wage arrestment, have received a decision or decree, or had court action taken against you we’d recommend getting expert advice from us.
Our expert team at Trust Deed Scotland® specialise in giving debt advice to people living in Scotland.
We can talk about your situation and help you find a solution to resolve your debt problem.
We’ve helped over 20,000 people get out of debt in Scotland, and we’ve got more five-star reviews than anyone else in the UK.
Call us on 0141 221 0999, or try our Trust Deed Wizard® to get started now.