What actions can a creditor take when pursuing a debt that is owed?

May 25, 2015

The term for creditor legal action in Scotland is ‘diligence.’ Your creditor will be obliged to follow strict rules for each type of diligence, and if they fail to meet their legal obligations in this way, the action can be challenged.

Your creditor will probably apply interest and charges to the outstanding debt in the first instance, which is why it is important to act quickly.

If the creditor decides to take action through the courts, what diligence processes can they use?

Default Notice
This may be sent after one or more payments have been missed on a secured loan, and gives you one more month in which to bring the account up-to-date. You should receive the Default Notice by Recorded Delivery post, and your creditor is required by law to send a Debt Advice and Information Package.

County Court Judgement (CCJ)
You have 14 days in which to respond by returning completed court paperwork to the creditor, offering a repayment figure. If the creditor does not accept your offer, a decision will be made by the courts as to how much you should pay.

21-day Statutory Demand
If your creditor is intent on making you bankrupt, you may receive a 21-day Statutory Demand for payment. This action is generally only taken as a last resort and for larger debts, as a creditor can only force you into bankruptcy if you owe them more than £3,000.

Fast track debt collection procedures in Scotland
Depending on the type of debt, your creditor may have the power to collect monies quickly via these specific processes:

Summary Warrant: can be used to recover arrears of tax and National Insurance, road tax and Council Tax. You will probably receive a Charge for Payment at the same time, which means that you have 14 days in which to pay the amount outstanding. The exception to this is Council Tax debts, for which you should be offered extra time to pay.

Extract for Payment: this may be sent in relation to a debt already recognised by the court. It allows your creditor to take further action without having to go through court process again.

Deduction from Earnings Order (DEO): you may receive a DEO in relation to arrears of child maintenance. It means that the Child Support Agency can take money directly from your wages without having to go to court.

Actions on the Dependence
These are specific warrants that your creditor can apply for when requesting the above authorities to pay. Essentially, these warrants limit your ability to sell your assets or move money around to avoid paying the creditor.

Arrestment of Earnings
This warrant will only be served if you have received a Charge for Payment and a Debt Information and Advice package. There are strict limits on how much of your earnings can be arrested.

Inhibition is a warrant that forbids you from selling your home. It is designed to ensure that the inherent value remains available to the creditor, should you be unable to repay your debt by any other means.

Attachment and Exceptional Attachment Orders
These essentially allow a creditor to seize certain possessions. An Attachment Order applies only to those non-exempt possessions outside your home, but an Exceptional Attachment Order means that certain goods inside your home may be seized.

Scotland Debt Solutions can advise on your best course of action if you are threatened with any of the above creditor diligence processes.

John Baird

Insolvency Adviser

Tel: 0800 063 9250

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