Action the creditor can take
This information applies to Scotland only
Do you owe the money
A creditor is an individual or an organisation or business that you could owe money to. If you do not agree that you owe the money there are ways to challenge the creditor. You may need the evidence to show you do not owe it. You may need the help of a specialist adviser to do this depending on what the debt is for. Information about this is in Check if you're responsible for a credit debt.
The first step for many creditors to try to recover money from you is to take legal action against you to prove that you owe the money. You will receive a claim form from the court and you will have to reply to it.
If no legal action is being taken and you accept that you do owe the money but want to negotiate some time to pay it, you can ask for this. The creditor can try to force you to pay it from whatever funds or other valuable possessions you have rather than negotiating but only with the correct legal authority. There are strict rules about how a creditor can do this.
It is against the law for any creditor or debt collecting business to harass you when trying to collect the money from you. There is more information about what might constitute harassment in Harassment by creditors.
A creditor can take legal action to force you to pay a debt. This is called diligence. The type of legal action that can be taken by the creditor is complicated to explain but there are strict rules that apply and the creditor must have the correct legal authority to make you pay it.
If any creditor is forcing you to pay a debt you must get specialist advice to check that the creditor is following all the rules. You should also make a final check with an adviser in case there are any other options left for you to pay the money back without being forced to. For example, if you have not yet had a court agreement giving you time to pay the debt you might be able to apply for this.
You can find an adviser at your local Citizens Advice Bureau - where to get advice.
This section explains all the ways in which you can be legally forced to pay a debt that you owe.
Some debts have special rules about how a creditor can get the authority very quickly to force you to pay. Check if what you owe means the creditor can use one of the fast track procedures below. If the money you owe is not one of these debts then the creditor has to have other authority as explained below.
Road tax, VAT, income tax, national insurance, certain benefit overpayments and council tax arrears
These debts can all be enforced using a summary warrant which provides the same authority as a court order. You have to pay the money within 14 days of getting the warrant as long as the creditor sent a charge for payment. If you have a council tax debt (this may be for arrears of water and sewerage charges) you must be offered time to pay it. If the debt isn’t cleared then the creditor can use some of the other ways below to force you to pay.
Sum of money in an agreement registered with the Books of Council and Session or sheriff court called a writ registered for execution
When the debt that you have was agreed with your creditor officially, in a document that was then registered in court, the creditor does not have to take you to court to prove that the money is owed. The court can issue an Extract for payment. In some cases this may be referred to as a Personal Bond.
Child maintenance arrears and a DEO
If you have child maintenance arrears, the Child Support Agency (CSA) or Child Maintenance Service (CMS) don't have to apply to court for an order to take money from your wages. They can make one themselves. This order is called a Deduction from Earnings Order (DEO).
Overpayment of benefit
If you have been overpaid benefit the Department for Work and Pensions (DWP) can take money from your wages by way of a Direct Earnings Attachment (DEA). There are strict rules about how much they can take. There is a very useful guide about deductions from wages for employers on the UK government website at www.gov.uk .
Fixed penalty, a fiscal fine or a compensation offer
The local authority and Fines Enforcement Officers of the Scottish Court service can get special fast track powers under an extract registered decree arbitral. If you don’t pay the fine or respond to the offer to pay compensation you can have more action taken against you, for example, your wages or bank or building society accounts arrested. There is more about Fines Enforcement Officers at www.scotcourts.gov.uk.
Can the creditor take action before having the legal authority to force me to pay the debt
When the creditor applies for the authority to make you pay the debt there are a number of warrants that can be applied for at the same time to control what you can do with your money and other assets. A creditor usually applies for these warrants to make sure you cannot hide or move the money in your accounts, sell any valuable goods or sell your home or borrow against it. These are called actions on the dependence.
These legal actions safeguard any money or valuables that you have so that the creditor can later use the enforcement powers to make you pay the debt. There are strict time limits for the creditor to stick to for applying for the authority that is needed to force you to pay while the action on the dependence is in force. Get advice to check that these rules are being followed. If they are not being followed the legal action taken by the creditor might not be valid.
Many creditors will have the power to force you to pay a debt from a court order called a decision (under simple procedure from 28 November 2016) and in other actions a decree. This means that the creditor will have proved in court that you owe the money. Some creditors may have the correct power from a fast track procedure because of the type of debt you have or due to the way you arranged to borrow the money under a special legal agreement.
If the debt you owe cannot be enforced under a fast track procedure, as above, the next step the creditor has to take is to send you a legal document in writing called a charge for payment. You should get advice to check that these legal documents are correctly filled in because if your name or what you owe is incorrect the documents may not be valid.
You can find an adviser at your local Citizens Advice Bureau - where to get advice.
Debt Advice and Information Package
A Debt Advice and Information Package has to be delivered with every charge for payment. If you did not get this package (leaflet) the demand for you to pay the debt is not legally correct. You can see what the package looks like on the Accountant in Bankruptcy website at www.aib.org.uk.
Can some of my wages be taken before I get them
Check above for fast track procedures to make deductions from wages for child maintenance arrears and overpayment of benefit
Anyone who is employed (apart from serving members of the armed forces) can have their wages arrested. This may be referred to as an earnings arrestment. A creditor who uses this way of making you pay your debt must have served a charge for payment and given you a Debt Advice and Information Package explaining your rights and encouraging you to go for advice. If the creditor has not done this arresting your wages is illegal.
If your wages are arrested there are strict rules about how much money can be taken and what happens if more than one creditor tries to arrest your wages at the same time. The amount taken will depend on how much you earn. The wages that can be arrested can include commissions, bonuses and statutory sick pay. You can get more advice about wages arrestment and how much can be taken towards your debts from a Citizens Advice Bureau (CAB).
Your employer may, as a condition of your employment, have a clause in the contract that states that wages arrestment is a matter for which you should be disciplined. This is common practice in some areas of work, for example, in the financial institutions. You may therefore need specialist employment advice as well as debt advice for example, at a Citizens Advice Bureau - where to get advice.
Can my bank and building society accounts be frozen and money taken to pay my debts
A creditor with the correct authority can stop you taking money out of your accounts by freezing them. This is called arrestment. There are strict rules about how this can be done and there is a minimum balance protected for you still to use in your account (£494.01 from 6 April 2016. This amount is still correct in 2017). If you have several bank accounts with the same bank the protected amount of £494.01 applies to all the accounts together. If you have several accounts but they are all in different banks the protected amount of £494.01 applies to each account separately. You should check carefully who you have your accounts with as some banks with separate names are in the same banking group. This could mean that the separate accounts may be treated as being with the same bank. The protected amount will be applied only once in that situation.
You may be able to object to a creditor forcing you to pay in this way because:
- you can argue that you will suffer undue hardship to yourself or other family members such as the more vulnerable members of the family like older people or children
- you have been allowed time to pay by a court
- the creditor did not use the correct procedures.
If you have been told that your accounts are to be frozen you must get help to sort out what options you have. Some of the funds going in to your account may be exempt from being frozen, for example, your child benefit. However, it is sometimes difficult to get the bank to separate this out for you. You should get help from an experienced adviser to negotiate for you. You may also need advice if you have joint accounts. The creditor cannot just be given the money that is owed straight away. You have to agree to it being paid out to the creditor but, if you don’t agree, after 3 months, the money will be paid out automatically.
The Child Support Agency or Child Maintenance Service can also take money from your bank account for child maintenance arrears. This is called a deduction order. They don't need to go to court to get a deduction order.
Can my house be sold to pay my debts
When you have mortgage arrears your lender can take a number of steps to make you pay the arrears and this may include selling your home. For more information about mortgage arrears see Mortgage problems.
When your debts are not for your mortgage the creditor can take legal action to stop you selling your home. This is a power called inhibition and is used by a creditor to safeguard the value in your property which, if you sold it, you could keep and it would be lost to the creditor. A creditor must send you a Debt Advice and Information Package and if this was not done the inhibition is not valid. You are likely to need help from an adviser to argue this point.
The creditor cannot take over the ownership of your property. As long as an inhibition is in force it does mean that you can’t sell it and keep any profit from the sale. An inhibition can be in force for up to 5 years.
You must get advice if there is an inhibition over your property - where to get advice.
Can my possessions be sold to pay off my debts
There are very strict rules about what possessions can be sold to pay off your debts. The process is called attachment. Most of your possessions are exempt from being attached because the law recognises that there are many items that are essential for your day-to-day life.
An attachment cannot take place in the property where you live so a creditor can only check what possessions you have outside of your home that s/he may want to sell to get their money back. The authority gained from an attachment is that the creditor can seize and sell any non-exempt goods outwith your home. This is usually done by sheriff officers for the creditor. If you store any non-exempt goods in your garage these goods could be seized and sold. However you may be able to argue that even the non-exempt goods are required for work.
The following items are listed as exempt in law (section 11 Debt Arrangement and Attachment (Scotland) Act 2002):
- a mobile home which is your only or principal residence
- tools of the trade (including books and other equipment), reasonably required by you for your trade, profession or business up to £1,000
- tools reasonably required for keeping the garden in order
- a vehicle up to the value of £3,000 if you can show that you need it
- clothing, toys, furniture, bedlinen, cooker etc, computer and other household goods that are reasonably required.
You must check with an adviser what goods are exempt from being attached in case sheriff officers take something that is exempt. You have 7 days to ask to have it returned.
A creditor can also apply to court for an exceptional attachment order to try to sell off some of the possessions in your home. Most of the essential goods in your home are exempt from being attached under this order too. The sheriff officer has powers to open shut and locked places in your home to attach any goods that are not exempt.
A creditor must have a charge for payment and must have provided you with a Debt Advice and Information Package before the action to attach your possessions is valid. If you have an attachment against your possessions you must get advice to check that the rules about selling your possessions are being properly followed and what other options you may still have to pay the debt. It is illegal to harass you.
Can my money be taken away from me by force
Cash and cheques cannot be forcibly taken from someone legally in their own home. There are powers available to have money seized if someone you owe money to has a money attachment. This power may be used against you if you owe money and are self-employed in a business that operates in cash, for example, a shop.
Creditor/s can force you to be made bankrupt (sequestrated)
You can be made bankrupt (sequestrated) by creditors in the following way:
- a single creditor in the UK or another EU member state to whom you owe at least £3,000, or
- a group of creditors in the UK or other EU member states to whom you owe jointly at least £3,000.
If you are in a DAS Debt Payment Programme you will have an approved money adviser and you must get in touch with the adviser. Creditors cannot make you bankrupt if you are in a DAS programme.
If you are in a Protected Trust Deed creditors cannot take any action to enforce payment of debts or make you bankrupt and your affairs will be handled by a trustee.
Creditors are only likely to take the extreme action of trying to make you bankrupt as a last resort because you have not paid your debts using other methods. You must get advice from a money adviser if you are being threatened with bankruptcy.