What is an earnings arrestment?
May 11, 2016
An Earnings Arrestment Order (EAO) is a form of ‘diligence’ that can be taken against you by a creditor. Diligence procedures are permitted once the creditor has been granted an appropriate court order, and earnings arrestment is just one of several measures they can take.
It will have been preceded by various attempts to collect the debt, including sending you a charge for payment. Earnings arrestment is a debt enforcement method often used by local councils to recover Council Tax arrears, but there are strict conditions as to how much they can take out of your pay.
Check that the order is valid
Before enforcing a debt in this way, your creditor must send you a charge for payment unless you are being pursued for an unpaid court fine, in which case this is not needed.
For the arrestment order to be legitimate, your creditor must also arrange for a Debt Advice and Information Package (DAIP) to be sent from the Accountant in Bankruptcy, no less than 12 weeks before serving the order.
The 14-day charge for payment is a formal demand to pay the debt, and the amount stated will include interest plus potentially other fees – in relation to sheriff officer services, for example. It’s advisable to carefully check the charge for payment and make sure all the details are correct, and also to read through the Debt Advice and Information Pack.
The arrestment order should be served by a sheriff officer, usually by recorded delivery direct to your employer. It will include instructions on how to calculate payments, along with the current deduction tables.
How much money will be taken from your earnings?
There are safeguards in place to ensure that deductions are reasonable, and the possibility that more than one creditor will issue an earnings arrestment is also taken into account. A formula is used to decide on how much each creditor receives, in cases where more than one arrestment has been served.
The amount deducted depends on how much you earn, and how often you are paid. A percentage of net earnings is used, but if you earn below the lowest level in the calculation tables there is no payment to make.
Earnings include commission, bonuses, overtime and statutory sick pay, as well as your basic net wage. Deductions continue until the debt is repaid in full, and if you change your job the order moves with you.
Earnings arrestment and your employment contract
Some employers include a clause in their employment contracts that being in debt is a disciplinary matter, and there may be a risk that you will lose your job. This is often the case with employers in the finance industry, the police force, and prison service.
It’s worthwhile checking your contract of employment just to be sure, but you may find that your employer is simply disgruntled because of the extra work involved.
Is there anything you can do to stop an earnings arrestment?
If you act quickly on receipt of the charge for payment, you may be able to negotiate a new payment plan with your creditor before the earnings arrestment comes into force. You should obtain professional advice in this situation, which is why your creditor is obliged to send you a Debt Advice and Information Package.
Scotland Debt Solutions specialise in helping people to escape the debt cycle. We will quickly assess your situation, and advise on all the options available. Our teams work from four offices around Scotland, and are available for same-day consultations.
If you’re worried that the council might take action against you for non-payment of council tax, entering into a Scottish trust deed can be a beneficial step. It stops legal action by all creditors included in the arrangement, and provides a ‘safe haven’ from which to regain control of your finances. As council tax arrears […]
A debt payment programme (DPP) remains on your credit file for six years, along with other default markers and court judgments that have been made against you. This can seriously affect your ability to borrow for this period of time, and longer. Even if you can secure borrowing, lenders are only likely to offer unfavourable […]
If you owe a debt of £5,000 or less, your creditor may send you a Simple Procedure Notice of Claim. This is a relatively new procedure that was brought in by the Scottish government and commenced on 28th November 2016 – their intention being to make it easier to resolve debt disputes. So if you’ve […]
A Bankruptcy Restriction Order may be made against you if it’s believed that you acted dishonestly, recklessly or unlawfully before you were made bankrupt, or during your bankruptcy. Your Trustee will inform the Accountant in Bankruptcy (AiB), and if their suspicions are upheld, a BRO of 2-15 years can be made depending on the seriousness […]
Debt payment programmes (DPPs) are an intrinsic part of the Debt Arrangement Scheme, which allows you to pay off unsecured debt at an affordable rate. If a debt payment programme is rejected by one or more creditors, the DAS Administrator can apply their discretion on whether to approve the plan, after using a test to […]
If you’re struggling to pay your unsecured debts, a debt payment programme could help you to regain control of the situation, and become financially stable again. Debt payment programmes are a fundamental part of the Debt Arrangement Scheme (DAS) in Scotland, and allow you to repay over a longer period of time. These programmes involve […]