Given the current financial climate you may wonder what options are open to you or your organisation when you are owed money by a third party. There can often be an assumption that lengthy court processes are required to recover sums due. That is not the case and in this article we consider some of the options available to help recover debts in Scotland.

Pre-Court Action

Statutory Demand

If you are owed more than £750 by a company or £1,500 or more by an individual or a partnership you can issue a document known as a "statutory demand". The statutory demand has to be in the prescribed form. Once it has been served the debtor has 21 days to answer the demand by either making payment or denying that the sums demanded are owing.

If payment is not made and the demand expires unanswered then the creditor can rely upon its expiry. In respect of a company, it can be relied upon as a basis for proving that the company is unable to pay its debts in accordance with section 123 of the Insolvency Act 1986. In respect of an individual, its expiry will constitute the debtor's "apparent insolvency" within the meaning of the Bankruptcy (Scotland) Act 2016.

Court Procedure

Simple Procedure Claim

Can be used for debts up to £5,000. A court action is commenced when the person owed the money, known as the "claimant", prepares a Claim Form outlining the details of the debt and providing any invoices or statements which support the claim. The Claim Form is then lodged at court. A copy of the form is then served on the debtor, known as the "respondent". The court issues a timetable outlining when the respondent has to lodge its defence or a make a Time To Pay Application.

If the respondent fails to respond to the Claim Form then the claimant will apply to the court for a decision.

If the respondent intimates an intention to dispute the claim, the Sheriff will send “first written orders” within two weeks from the date the court received the Response Form. The “first written order” may do one of five things:-

  1. Refer the case to alternative dispute resolution;
  2. Arrange for a case management discussion;
  3. Arrange a Hearing;
  4. If the Sheriff thinks a decision can be made without a Hearing, indicate that this is the Court’s intention; or
  5. Possibly dismiss the case.

Ordinary Actions

Can be used for debts over £5,000. The person owed the debt, known as the "pursuer" prepares an initial writ and lodges this with the court. The writ is then served on the defender. The defender has 21 days after service of the writ to decide what action to take. There are various ways the defender can respond to the service of the writ.

If the defender does nothing the pursuer can, on the expiry of 21 days, minute for decree. If the defender admits the claim and makes a payment offer, the pursuer will complete an appropriate form and send it to the court. If the offer is unacceptable the case will call in court and the court will decide if the writ should be granted.

Inhibition on the Dependence

If you are concerned that a debtor will sell their property to avoid paying you, you can apply to the court for inhibition on the dependence. An inhibition on the dependence prevents a debtor from disposing (selling) or burdening (taking additional security over) any land or buildings they own. You will only be able to obtain an inhibition on the dependence if you can persuade the court that:

  1. You have an apparently valid basis of claim, which is set out in the court writ
  2. there is a risk that any decree will be defeated either by insolvency of the paying that party or as a result of assets being removed, concealed, or disposed of thus preventing recovery
  3. the use of diligence is reasonable in all the circumstances of the case.

If you are granted inhibition on the dependence then you need to register and serve it to allow you to get the protection provided by the court, that protection will last until the court action has ultimately been determined.

Interim Attachment

If you have started court proceedings against a debtor and you are concerned that they may not be able to pay at the conclusion of the case, you can seek to obtain some security around the debtor's ability to make payment pending the outcome of the court proceedings. Attachment is a diligence that allows a creditor to have sheriff officers remove certain assets of the debtor's property and realise it (sell it) to repay pay the debt due. Interim attachment restricts the debtor's ability to deal with movable assets in their possession. Interim attachment is used infrequently as there are a limited class of assets that can be attached. In practice it is mostly cars and other motor vehicles that are generally attached.

Following Court Decree

Charge for Payment

Once you receive a decree ordering a debtor to make payment to you, sheriff officers can be instructed to serve a written demand for payment on the debtor, this is called a Charge for Payment. The debtor will have a period of 14 days within which to pay the sums demanded in the Charge for Payment. If payment is not made within 14 days this can be relied upon in further court proceedings to bring insolvency or bankruptcy proceedings against the debtor.

Bank Arrestment

If you know where the debtor holds bank accounts, sheriff officers can serve an arrestment on those banks. This means that if the debtor has an account with that bank; the bank is required to arrest the sums up to the value of the debt and pay these to you.

If the debtor is an individual the money in the account must be above the protected statutory minimum balance. The current protected statutory minimum balance is £1,000.

If bank account details are not known, then sheriff officers can serve speculative arrestments on banks who you think the debtor might have a connection with. You will only be notified if the arrestment has been successful.

Earnings Arrestment

If the debtor is an individual and you know where they work, sheriff officers can serve an Earnings Arrestment Schedule on the debtor's employer. The Earnings Arrestment Schedule obliges the employer to make deductions from the debtor's earnings and pay those to you as the creditor. If the employer fails to comply with the earnings arrestment, they can be held liable to pay the debt in full.

It is worth noting that, if a debtor does not have the funds to pay their debts, you may have difficulties with enforcement. If you require advice regarding outstanding debts, we would be happy to advise you on your options, whether those be in the form of court proceedings or an alternative to court.


Sarah Wilson


Lucy McCann