Action taken by a creditor to recover monies owed is termed ‘diligence’ in Scotland, and is generally permitted once a court order has been issued but remains unpaid. One such diligence procedure that may be granted by the court is an Earnings Arrestment Order (EAO).
This is an instruction from the court to your employer to deduct a pre-arranged amount of money from your net weekly or monthly earnings, which is used to repay your creditor(s). Prior to an EAO being granted, your creditor must have issued a charge for payment which allows 14 days to repay.
They are also required to arrange for a Debt Advice and Information Package (DAIP) to be sent to you by the Accountant in Bankruptcy. The DAIP provides trusted sources of debt advice, plus information on various types of enforcement action.
Strict regulations exist around the calculation of payments for an Earnings Arrestment Order, so that debtors are not forced into further financial difficulties. A sheriff officer will send the EAO directly to your employer, with a copy going to you by post.
Repayments are calculated using statutory tables that factor in your earnings, with a percentage being deducted each salary date. Different tables exist for daily, weekly and monthly-paid employees, and your employer is entitled to charge you £1 for each deduction made, to cover their administrative costs.
As we mentioned earlier, payment amounts are regulated so that you are not plunged into further financial stress, and to account for the possibility of more than one creditor being granted an EAO.
Payments will be deducted until the debt plus interest is repaid in full, you change jobs, or your creditor decides to cancel the order.
Depending on the type of employment, your job may be affected by an Earnings Arrestment Order. Some industries including financial, legal and the police force, have stipulations in their contracts of employment, banning employees from getting into debt.
To avoid potential disciplinary action, it is important that you speak to your employer quickly once an EAO has been granted. You may be able to offer them reassurance that this is a temporary situation, and that your present financial difficulties have been caused by a specific event or circumstance.
Your employer will be required to provide information about your salary and payment dates to the court. Each repayment is deducted, and sent to the sheriff court for dispersal to your creditor(s).
There is no direct recourse for appeal against an Earnings Arrestment Order. Should you feel that the repayment amount is too high, and that you cannot afford to pay it, you need to seek advice from a legal expert or debt advice professional.
Scotland Debt Solutions offers debt advice to Scottish residents. If you have received an Earnings Arrestment Order, or are worried about repaying a creditor, contact one of our specialist team. We can arrange a meeting free-of-charge to discuss your situation, establish your options, and find the best way forward.
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