The rise in the use of Bank Account Arrestments in Scotland (also known as Actions of Arrestment and Furthcoming) , to recover debts, is a growing cause for concern and forcing thousands of Scots to experience serious financial harm each month.
In many cases, the debt recovery tool that can only be used by Sheriff Officers, is forcing thousands of Scots into having to choose between buying food, paying rent or heating their home.
In the worst-case scenarios, the legal debt recovery tool is forcing many to seek help from food banks.
Even where the Bank Arrestments are not successful, because someone has insufficient funds in their account, they still have the costs of the process added to their debt and banks add on a £25 administration fee (which when you only have Universal Credit can leave you suffering severe financial harm until your next payment).
Bank Arrestment Numbers Continue To Rise
Last year in Scotland over 173,000 non-earning arrestments were executed by Sheriff Officers, with the vast majority being bank account arrestments (a 33% increase on the number since 2011-12).
These arrestments, once served, then force the bank to arrest all sums in the account over £529.90 (the Protected Minimum Balance) up to the amount of debt that is owed.
Unlike Wage Arrestments, however, Bank Arrestments do not restrict how much Sheriff Officers can take over the Protected Minimum Balance (PMB) of £529.90.
With a wage arrestment, only 19% of the amount above the PMB can be taken (until the monthly sum earned is over £1,915.32, when the percentage increases to 23%).
This means if you get your wages arrested and earn only £1,200 per month, you will only have £127.19 taken. However, with a Bank Arrestment,£670.10 will be taken (assuming your debt is that or more).
It is no wonder, therefore, that last year in Scotland, when over 170,000 Bank Arrestments were executed, approximately only 70,000 Earning Arrestments were carried out.
Why arrest someone’s wages when, if you wait for them to be paid into their bank account, you can get £670.10 instead of £127.19?
Scots Law has always recognised the potentially harsh effects of Bank Account Arrestments, which is why in 2008 the Protected Minimum Balance was introduced.
However, the level of protection the PMB provides is grossly inadequate. It has always been linked to the Protected Earnings Limit that exists in Wage Arrestments, but has never included the additional protection of restricting the amount that can be taken above the PMB.
Also, although it has always been possible to challenge a Bank Account Arrestment, on the grounds it is Unduly Harsh, this a Court Based procedure and can take over 8 weeks before you get a hearing in front of a Sheriff. By then it is too late and the undue hardship has already been suffered.
Statutory Debt Solution Review
I would call on the Scottish Government to use its recently announced Review of Statutory Debt Solutions as an opportunity to review what remedies consumers have when their bank acccount is arrested.
There is no question, that Bank Arrestments, one of the harshest forms of debt recovery available, are now excessively being used and risk bringing the whole procedure into disrepute.
Equally, how can leaving families, often with children,having to choose between heating their homes and feeding themselves not be described as unduly harsh?
As an immediate solution, subject to eventually increasing the level of protection for funds held in bank accounts, I would urge the Scottish Government to replace the Court based procedure for challenging a Bank Account Arrestment, with an administrative procedure.
This would mean allowing people, with the assistance of a Money Adviser or Insovency Practitioner, to apply for a Bank Arrestment to be recalled or restricted to the Accountant in Bankruptcy’s Office.
Such a process would be free, quick and would also require the person to seek advice, whilst avoiding them having to choose between feeding themselves and their children, heating their home or paying their mortgage or rent.