CHARGE FOR PAYMENT
A Charge is a formal written demand for payment of sums owed. After it has been served on a debtor it provides a period to comply (normally 14 days). Should the debtor fail to make payment then further action may take place. The Charge is an important step in the recovery process as unless it has been served you are not permitted to execute an Attachment, Earnings Arrestment or Money Attachment. A Charge for Payment can also be used to establish the apparent insolvency of a debtor where the debt exceeds £3,000.00.
ARRESTMENT
This is a diligence which attaches (freezes) the goods of debtor in the hands of a third party. The arrestment is served in the hands of the third party and orders them not to pay or return to the debtor any movables which they have an obligation to account for. The most common example of an arrestment is where a creditor arrests a bank account in order to attach the funds in the debtors account. Where money has been arrested the arrestee (third party) is required to pay the sums arrested to the creditor within 14 weeks following the arrestment. The debtor can however object to the automatic release and the matter is then determined by the court.
INHIBITION
This is a diligence which strikes against a debtor’s heritable property and once executed prevents the debtor from selling, disposing or otherwise burdening their property. Inhibition is purely a prohibitive diligence and does not transfer title to any heritable property affected.
EARNINGS ARRESTMENT
An Earnings Arrestment is a diligence which is served on a debtor’s employer. It has the effect of requiring the employer to make deductions from the debtor’s salary every payday until the amount due has been paid. The amount deducted is determined by a sliding scale depending on the debtor’s net pay. This diligence is normally executed by recorded delivery post however can also be delivered by hand.
ATTACHMENT
This is a diligence used against a debtor’s moveable property which is in the debtor’s possession outwith a dwelling place. A Sheriff Officer attends the debtor’s premises and notes (attaches) the debtor’s assets from which point the debtor is prohibited from disposing of them. This is an incomplete diligence as at this point the goods are still in the debtor’s possession. There are separate procedures relating to goods situated within dwelling houses in which case an Exceptional Attachment Order must be applied for to the Sheriff Court and a number of exceptional circumstances must be established before the order is granted. Not all assets of a debtor can be attached as some items are deemed essential.
AUCTION
This completes the diligence of attachment when the attached goods are removed from the debtor’s possession and are sold at an auction. The proceeds of the auction then go towards paying the outstanding debt. Should the goods remain unsold after the auction they become the property of the creditor.
MONEY ATTACHMENT
This is a relatively new diligence in which a Sheriff Officer attends at a debtor’s commercial premises and attaches money located within the premises which is then removed by the officer.. The diligence only applies to cash and cheques and not card transactions.