Can I be forced to pay my debts?
A creditor can only force someone to pay their debts if it has taken the correct legal action. In many cases this might be because they have a court order called a decision or a decree.
Some creditors have extra fast track powers that mean they don’t have to go to court to prove you owe the debt, for example, HM Revenue and Customs.
When the creditor is able to force you to pay the debt this is called diligence.
Step 1: Check what powers the creditor has
If you owe money for any of the debts or legal arrangements listed below, action to force you to pay may happen very suddenly with a summary warrant.
The creditors that have fast track powers are:
- UK Government – for road tax, VAT, income tax, national insurance
- Department for Work and Pensions (DWP) – for benefits overpayments
- Child Support Agency (CSA) or Child Maintenance Service (CMS) – for child support owed
- Local authority – for arrears of council tax or water and sewerage charges but not rent (see below)
- Local authority and Fines Enforcement Officers of the Scottish Court service - for fines like court fines and parking fines
- Creditor had an agreement registered with the Books of Council and Session or sheriff court called a writ registered for execution – this acts like a court order
If you owe money to the local authority for rent it has to follow strict procedures to negotiate how the arrears can be paid back before they take court action to force you to pay.
Step 2: Do you owe the money
The first step for most creditors who want to recover money from you is to take legal action against you to prove that you owe the money. You will receive an official form from the court and you can reply to it. If you do nothing the court is likely to make an order in favour of the creditor.
If you agree that you owe the money you might be able to ask the court for time to pay even when the creditor has started court action. There is information about time to pay for debts under £5,000 on the Scottish Courts website.
If you are being pursued for a debt of more than £5,000 you should get advice from a specialist adviser about your options.
If you do not owe the money or, you do not agree about the amount you are told you owe, you may need evidence to support your position. You may need the help of a specialist adviser to do this.
If you do not think that the creditor has followed the correct procedures to make you pay a debt you must get advice from a specialist money adviser about what to do next to challenge the actions of the creditor.
Step 3: Check the creditor has followed the correct procedure
Did you get a Debt Advice and Information Package (DAIP)? It has to be issued to you before you can be forced to pay the debt.
A Debt Advice and Information Package has to be delivered with every charge for payment or charge to pay. If you did not get this DAIP package (leaflet) with the charge, the demand for you to pay the debt is not legally correct but the creditor has 48 hours after delivering the charge to get the DAIP to you.
A charge for payment or a charge to pay is an official statement from the court that it agreed to a court order for your creditor to pursue you for the debt. A charge for payment will look like this. A charge to pay will look like this .
You can see what the DAIP looks like on the Accountant in Bankruptcy website at www.aib.org.uk.
In summary, a creditor can force you to pay a debt if a:
- court has issued a decree or decision
- time to pay arrangement agreed with the court has been broken by you
- summary warrant has been issued because the creditor has powers to ask the court to issue it
A decree or decision from a court action and a charge for payment or charge to pay must be issued by the creditor and usually delivered by a sheriff officer, then the creditor can:
- arrange for deductions from your salary/wages
- arrest funds in your bank/building society account (final decree alone will do)
- place an order on your home to stop you selling it (an inhibition) (final decree alone will do)
- arrange for an attachment to your possessions then they can be auctioned at a later date
All of these diligence actions have strict rules that have to be followed by the creditor.
- Wages arrestments
- Bank arrestments
- Sale of home
- Sale of possessions
- Being made bankrupt/sequestrated
Step 4: Check if the creditor has put legal restrictions on what you can do with your money and other assets
When the creditor applies for the powers to make you pay the debt, there are a number of warrants that can be applied for at the same time. These control what you can do with your money and other assets until the debt is settled. These are called actions on the dependence.
A creditor usually applies for these warrants to make sure you cannot hide or move money in your accounts, sell any valuable goods or sell your home or borrow against it before the legal action the creditor is taking has been put fully into effect.
There are strict time limits for the creditor to stick to while an action on the dependence is in force. You should 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.