Earnings Arrestment – Analysis , FAQs & More
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What is an earnings arrestment order in Scotland? This guide is for anyone wanting to know more about having your wages arrested, especially if you were recently served with a charge for payment.
We’ll provide clear answers and discuss some of the options available to you. Let’s get into it…
What is an earnings arrestment order?
An earnings arrestment order is a form of diligence and a way for creditors to recover unpaid debts in Scotland through court action. The creditor must ask the local court for a court order which instructs the debtor’s employer to make deductions from their net earnings. These monthly deductions are then sent to the court, which hands the money over to the creditor that is owed the money.
The amount taken depends on how much is owed and how much you earn. It continues until all of the debt has been repaid. The employer must follow the instructions given or face consequences themselves. If you change employer, you must notify the new employer of the earnings arrestment.
In a nutshell, it automates the debt repayment process for creditors and debtors by taking money from their net earnings before it hits their bank account.
An earnings arrestment is one later-stage option to recover unpaid debts, and it is often used to recover unpaid Scottish council tax debt.
What is a wage arrestment in Scotland?
An earnings arrestment is also known as a wage arrestment. We will use wage arrestment as another term to refer to an earnings arrestment throughout our guide.
Is a wage arrestment the same as an attachment of earnings?
A wage arrestment has another name south of Hadrian’s Wall. In England and Wales, the same method of debt enforcement is used where deductions are made automatically from the debtor’s wages, but it is called an attachment of earnings order. These orders can only be granted by the local county courts after a CCJ has been issued for the debtor to repay – and ignored.
Just like in Scotland, the creditor may not choose to try and enforce the debt this way. There are alternative options, which may be more suitable, especially if the debtor has no employer.
When can a wage arrestment be used?
A wage arrestment can be used to collect different types of debt, ranging from consumer credit like loans and credit card arrears to council tax debts and even HMRC debt.
One Scottish debt solutions provider claims that around 250,000 wage arrestments were used between 2017 and 2018. Out of those, approximately 200,000 were used to recover unpaid council tax debts, whereas 45,000 of them were used to chase consumer credit debt. From these numbers, it’s clear that a wage arrestment is predominantly a method of debt collection for council tax debt – but not exclusively.
What is a charge for payment?
An earnings arrestment is only used to arrest your wages at the later stages of debt collection. Before the creditor can apply to the court for this type of court order, they must follow a stringent debt recovery process, giving the debtor chances to pay direct.
One of the steps before asking for money to be taken from your wages is to send you a charge for payment. This is a legal request for you to make a debt repayment. The creditor must use sheriff officers to serve the charge for payment, who will give the debtor 14 days to pay or contact the sheriff officer to negotiate an affordable debt solution.
The Sheriff officers are only allowed to serve the charge for payment within 12 weeks from the date that you received the debt advice and information package.
What is a debt advice and information package?
The debt advice and information package is a document intended to help debtors when they have debts they cannot afford to repay. It provides information on ways to pay back what they owe to one creditor or more. It explains formal and informal debt solutions, such as a Trust Deed or a Debt Arrangement Scheme.
The pack must be sent to the debtor from the creditor if the creditor intends to take further action to recover the debt. They can only apply to use an earnings arrestment if the debt advice and information package was sent to the debtor within the previous 12 weeks.
How will the sheriff court serve the charge for payment?
Sheriff officers typically deliver the charge for payment by hand at your address. If you are not home they will simply post it through your letterbox. They may choose to save time by sending the document by recorded delivery.
This is a legal document and not like other requests to repay your debt; you should act within the 14 days provided and seek free debt advice.
If you do not pay the money after benign served the charge for payment, the local sheriff officers may be able to:
- Use a wage arrestment to make deductions from your wages
- Freeze your bank account
Creditors can use the wage arrestment to make you bankrupt too, known as sequestration in Scotland.
What income does an earnings arrestment cover?
A wage arrestment is used to take money from employment income. For most people this is straightforward. But if you are paid other payments or commission as part of your work, you may be wondering if this other income is included.
All commission and bonuses are classed as part of your employment income and deductions can be made. If you receive statutory sick pay, even this income is subject to the earnings attachment.
However, if you only receive statutory sick pay and nothing else, you won’t have to pay anything because it is below a protected amount of income you must earn before anything is taken. Statutory maternity or paternity pay is different and cannot be deducted from at all.
How much do you pay back on a wage arrestment?
We have tables to explain how much you pay back, which is determined by your wages. As of April 2019, the minimum amount you must be paid without deductions made has gone up.
There are different tables depending on if you get paid, daily, weekly or monthly:
£17.42 or below = NIL
Between £17.43 and £62.97 = 50 pence or 19% of earnings above £17.42, whichiver is more
Between £62.98 and £94.67 = £8.65 + 23% of earnings above £62.97
£94.68+ = £15.95 + 50% of earnings above £94.67
£122.28 or below = NIL
Between £122.29 and £442 = £4 or 19% of earnings above £122.28, whichever is more
Between £442.01 and £664.50 = £60.75 + 23% of earnings above £442
£664.51+ = £111.92 + 50% of earnings above £664.50
£529.90 or below = NIL
Between £529.91 and £1,915.32 = £15 or 19% of earnings above £529.90, whichever is more
Between £1,915.33 and £2,879.52 = £262.23 + 23% of earnings above £1,915.32
£2,879.52+ = £485 + 50% of earnings above £2,879.52
The correct way to calculate what will be paid from your wages is to make the calculation to two decimal places of the penny. You should round up and down to the nearest whole penny and any time it is in the middle (.5) you should round down.
Will I lose my job because of the earnings arrestment?
Most people’s careers will not be affected by the earnings arrestment. Your employer should not discriminate against you because you had your wages arrested. And they should not disclose any information about the wage arrestment to other staff members.
There are a limited number of workers who may not be able to continue in their current role because of the earnings arrestment. Most of these jobs are roles in finance. You may be able to contest the wage arrestment if you think you could lose your job due to the order.
Can you stop an earnings arrestment?
There are limited options to try and stop an earnings arrestment order. But one option is to apply for a Time to Pay Order.
This is a court order that asks the judge to grant you permission to repay the debt over time, and simultaneously, block any creditor from serving you a charge for payment. And as you know by now, without one of these served, the creditor cannot take further action to get an earnings arrestment.
Can you have more than one wage arrestment?
It is possible to have multiple wage arrestment orders placed on you at one time. But just because you have two or more, doesn’t necessarily mean you will have to make bigger payments each month.
For example, if you are a low earner only paying back a small monthly amount and no more can be taken from your employment income, then the amount taken by your employer will remain the same. The Sheriff court will then divide this payment and send it to each creditor you owe. Even though you will not pay more out of your wages, repayments are likely to last longer.
Consider a Debt Arrangement Scheme (DAS)
If you are being chased by a creditor for debt repayments, have yet to be served with a charge for payment and you have a regular income, a Debt Arrangement Scheme (DAS) may be a good solution.
A Debt Arrangement Scheme is a debt solution that freezes interest and charges while also agreeing on smaller more affordable payments. It is a government-backed scheme that has already helped thousands of Scottish debtors to get out of debt and correct their personal finances.
Another option for people with a regular income is a Trust Deed. if you have more than £5,000 worth of debt, a Trust Deed could be the answer.
Contact a free debt charity for more information and tailored support.
How long can you be chased for a debt in Scotland?
Sometimes your debts can no longer be chased in Scotland due to The Prescription and Limitation (Scotland) Act 1973. Consumer debt, i.e. those debts from credit cards and loans, can only be chased for five years as long as all conditions apply.
But unlike in England and Wales – which is a six-year countdown – council tax debts are not included in this Act. Instead, council tax debts can only become unenforceable after a period of 20 years, as is the same for mortgage debts (capital only).
The quick answer is that your creditors have five years to recover the money from the date it was due or the last date you made a payment. However, council tax debts can be collected within 20 years.
What to do if your debt is statute-barred?
If your debt has become statute-barred, you should write to any creditor trying to collect this debt and inform them that it has become legally unenforceable. You may want to check with a debt charity first.
You should then write them a letter asking them to write off the debt, which they are more likely to agree to, considering they can not collect the money owed either.
Access free Scottish debt advice!
Access personalised support and advice direct from a charity. Step Change Scotland is just one of many excellent charities offering free help during the process of a wage arrestment – and before.
Contact them now and use our other Money Nerd guides to learn about other arrestments and related topics.