This series looks at the enforcement options available to creditors to recover sums due by a debtor in Scotland. In the previous edition we looked at Inhibition which is similar to a Charging Order in England. A reminder can be read here. In this edition, we now turn to look at how Earnings Arrestment operates in Scotland.
Earnings Arrestment in Scotland is a form of diligence (enforcement) which can be used by creditor to recover sums due from a debtor. If an Earnings Arrestment is in place the debtor's employer must deduct sums from the debtor's salary/wages on a daily, weekly or monthly basis, depending how often he is paid and pay it over towards the debt. A Scottish Earnings Arrestment is similar to an Attachment of Earnings in England and Wales but with one particularly significant difference. In Scotland the deductions from a debtors salary/wages are not calculated based on the debtor's income and expenditure. Scottish deductions are calculated based on fixed amounts set out in statutory tables. This entails that an earnings arrestment in Scotland is not restricted to arresting or attaching the amount which the debtor can actually afford but will arrest or attach an amount fixed by statute.
Earnings Arrestment: some key points
- A creditor must have firstly obtained a court decree (judgment) or have an equivalent document (e.g. Summary Warrant or registered document of debt).
- The debtor must have been served with a Debt Advice and Information Pack (DAIP) and a Charge for Payment (a final formal demand for payment). At least fourteen days must then have passed since the Charge for Payment was served without the debt having been satisfied.
- Sheriff officers can then be instructed to serve an Earnings Arrestment Schedule on the employer of the debtor.
- The Earnings Arrestment Schedule orders the employer to make deductions from the debtors salary/wages every week, month or day, as appropriate whilst he is employed or until the sums are repaid in full.
- There are consequences for the employer if it fails to comply and make the deductions, including the employer being found liable to make payment of the sums which should have been paid
- If an Earnings Arrestment is already in place and another creditor wants to recover monies from the same debtor from his wages/salary then a Conjoined Arrestment Order application can be made via the court. If granted the court then collects the deductions and pays them out to each creditor.
- The Debtors (Scotland) Act 1987 sets out how amounts to be deducted are calculated, which includes a minimum level of income which is protected. By way of example, the current amounts to be deducted from a debtor who is paid monthly are set out in the table below.
- The current statutory tables of deductions applicable to weekly and daily earnings, as well as monthly earnings, can be viewed here.
- Whilst the deductions are set at a statutory amount, if a debtor engages following implementation of an Earnings Arrestment and/or a creditor has concerns about the affordability and sustainability of the deductions then, in practical terms, an informal payment arrangement is often reached with the debtor at an alternative amount and the Earnings Arrestment can be stopped.
DEDUCTIONS FROM MONTHLY EARNINGS
Not exceeding £566.51
Exceeding £566.51 but not exceeding £2,047.65
£15.00 or 19% of earnings exceeding £566.51, whichever is the greater
Exceeding £2,047.65 but not exceeding £3,078.47
£281.42 plus 23% of earnings exceeding £2,047.65
£518.51 plus 50% of earnings exceeding £3,078.47
To achieve payment, either in full, or by instalments over a period of time, it is important that a creditor has a clear and defined strategy in relation the selection of accounts and the enforcement of decrees (and other documents of debt) to maximise the prospects of repayment. Identifying whether a debtor in Scotland in in employment can form an important part of a pre-litigation evaluation process. If a debtor is known to be employed then Earnings Arrestment in Scotland can be a valuable and effective tool as part of a debt recovery strategy.