Arrestments

Arrestment is form of diligence which can be utilised in order to recover monies owed in terms of a court judgment (known as a decree or decision form in Simple Procedure actions). 

Arrestment comes in various forms which operate differently in practice. These include: 

• Earnings Arrestment 
• Bank/ Third Party Arrestment

What is an Earnings Arrestment?

An earnings arrestment is a form of diligence which allows a creditor in whose favour a court judgment has been granted to recover regular deductions from the debtor’s salary/ wages on every pay day during the debtor’s employment until the debt is settled or extinguished, or the debtor ceases to be employed by the relevant employer or the arrestment is recalled/ abandoned by the creditor. 

What can be recovered by Earnings Arrestment?

The level of deductions is prescribed by the Debtors (Scotland) Act 1987. Deductions can only be made where the debtor’s net earnings exceed a particular (set by regulation) sum per month. Beyond that level, the level of deduction varies depending on the debtor’s net earnings. 

The debt recoverable by earnings arrestment includes the sum specified in the relevant court judgment plus interest and expenses incurred in relation to the earnings arrestment and the Charge for Payment which preceded it.

Multiple debts owed by the same debtor to the same creditor can be recovered via a single earnings arrestment.

When can an Earnings Arrestment be used?

Earnings arrestments are only applicable to debtors who are individuals (as opposed to companies or other legal entities).

In practice, an earnings arrestment would be served by Sheriff Officers on the debtor’s employer. It can only be served within 12 weeks of a debt advice and information package being provided to the debtor.

A Charge for Payment must also have been served on the debtor in advance and at least 14 days must have elapsed since service of the same.

Once the earnings arrestment has been successfully served, the debtor’s employer is under an obligation to comply, failing which, the employer can be held liable for the debt. 

Conjoined Arrestment 

In the event that a debtor already has an earnings arrestment in place with their employer (served by another creditor) then an application can be made to the court for a Conjoined Arrestment Order. If successful the court will receive the deductions from the employer and will forward the deductions onto each creditor, dependant on the outstanding sums due to each creditor.

What happens if an Earnings Arrestment is disputed?

A debtor can challenge the validity an earnings arrestment by application to the relevant Sheriff Court. If the Court is satisfied that an earnings arrestment is invalid or has ceased to have effect it can make an order declaring that to be the case and also make any consequential order as necessary.

The Court also has the power to determine any dispute between the debtor, creditor or the employer and make orders in relation to the same, including: the reimbursement of any payment made in the operation of the arrestment which ought not to have been made; or the payment of any sum which ought to have been paid in the operation of the arrestment but which has not been paid.

What is a Bank/ Third Party Arrestment

A bank/ third party arrestment (usually known simply as an arrestment) is a form of diligence which allows a creditor to ‘freeze’ or ‘ring-fence’ monies due to the debtor and held by the party upon whom the arrestment is served. An arrestment can also be used in the same way in relation to moveable goods owned by the debtor. For example, an arrestment can be served on the debtor’s bank in order to arrest monies held in the debtor’s bank account. Alternatively, an arrestment can be served on third parties who owe the debtor money.

When can an Arrestment be used?

Unlike most other forms of diligence, generally there is no requirement to serve a Charge for Payment prior to serving an arrestment.  However, a creditor must have obtained a court judgment or other relevant document entitling them to enforce the debt (such as a statement of arrears in connection with a lease which is registered for “preservation and execution”).

Sheriff Officers can then serve a schedule of arrestment on the relevant party (known as the arrestee). The monies/ goods held by the arrestee as at the point in time when schedule of arrestment is served would then be ‘frozen’ (i.e. the arrestee cannot release the monies/ goods to the debtor). 

An arrestment can also be used to arrest monies sought by a creditor in court action where the action has not yet been determined and is on-going. This is known as an arrestment on the dependence.

What can be recovered by Arrestment?

The monies which can be ‘frozen’ by an arrestment are restricted to the amount the arrestee holds for the debtor, or the total amount (including an allowable sum for expenses and interest) due to the creditor, whichever is less.

The monies which can be arrested are subject to a protected minimum balance which cannot be ‘frozen’ in the context of arrestments served on the debtor’s bank.

After monies are arrested, the debtor is permitted a period of 14 weeks within which they can challenge the arrestment (by application to the relevant Sheriff Court). Upon expiry of 14 weeks, if there has been no challenge, the monies are automatically released to the creditor.

The debtor can authorise the early release of the monies to the creditor but is not often used in practice.

Where goods are the subject of an arrestment, the creditor must raise, what is known as, an action of forthcoming at the relevant Sheriff Court in order for the court to make an order allowing the creditor to take possession of the goods.

Our experienced team can advise on arrestment and other enforcement options available.