What are Earning Arrestments?
In Scotland, Earnings Arrestments, (also known as wage arrestments), are a form of Diligence, which is a legal term for procedures used to recover debts.
What Earning Arrestments do, is allow your creditors, the people you owe money, to recover that money from you by forcing your employer to deduct it from your wages, usually on a daily, weekly or monthly basis.
Your Employer has no choice but to comply with the order, if it is served on him by a Sheriff Officer; but he can only deduct certain amounts from your wages and cannot leave you without any money.
Normally, an Earnings Arrestment continues until such time the debt is paid off, which would include paying off any interest and legal costs your creditor has incurred in trying to recover the debt from you.
It sometimes can be possible to get an Earnings Arrestment stopped before the debt is repaid in full. To find out more about this see below.
How do Earning Arrestments work?
Before a Sheriff Officer can execute an Earnings Arrestment, however, they must first ensure the creditor has met the necessary legal requirements enabling them to do so. This means they must first have obtained a court order or its equivalent, or have a document of debt that provides them with a warrant to recover their debt using an Earnings Arrestment (this is known as Summary Diligence).
A court order is an order granted by the Sheriff in the Sheriff Court, although it can also be granted by the Court of Session. The legal equivalent of a court order, a Summary Warrant, is also granted by the Sheriff Court for certain types of Government debts, such as council tax arrears, owed to local authorities; or income tax, owed to HMRC.
A document of debt is more complex, but certain creditors like landlords and credit unions can register debts for what is known as preservation and execution in the Books of Council and Session. This allows them to legally recover debts using a sheriff officer, without going to court. This process is known as Summary Diligence. However, for them to do this you need to give them permission when you enter into the original agreement and which the debt arose from. This is not an option open to credit card companies and banks.
Prior to instructing a Sheriff Officer to execute an Earnings Arrestment, a creditor first must instruct them to serve what is known as a Charge for Payment. This is a legal demand for payment that is served by a Sheriff Officer. It gives you 14 days to pay your debt in full. If you fail to pay the debt within the 14 days, the lender is then in a position where he can instruct the Sheriff Officer to arrest your wages.
Practical Considerations of an Earnings Arrestment
There are many practical considerations that a lender must take into consideration before they execute an Earnings Arrestment. The first of these is, he must know where you work. If he does not know where you work, Sheriff Officers will obviously struggle to serve the schedule on your employer.
Even if they do know where you work, another practical consideration is whether the Arrestment will be successful, in that you may not earn enough for any deductions to be made from your wages.
Also, the Earnings Arrestment may have the effect of making you seek advice and, even if you choose not to use an insolvency solution, you may apply for a Debt Payment Programme under the Debt Arrangement Scheme or a Time to Pay Order, both of which if successful would result in the earning arrestment being lifted.
For these reasons, most creditors will only take the risk of executing an Earnings Arrestment if they feel all other options have been explored and exhausted.
Can you have more than one Earning Arrestment?
More than one wage arrestment is possible at the same time. This is known as a conjoined arrestment and is administered by by the local sheriff clerk, rather than the employer.
It does not mean you have to pay more. Instead what happens is the amount deducted is divided up between those that are owed the money.
It also means the first creditor who arrested the wages will see the amount they get being reduced. It also means those who execute the second wage arrestment wont get what they would have if they had been the only creditor arresting the wages. For this reason, it can be to advantageous to explain to other creditors you already have an arrestment in place. This may put them off from taking furher action and encourage them to accept an informal offer from you instead.
However, if you believe you are about to get a second wage arrestment, you should seek advice. A conjoined wage arrestment will stop you applying for the Debt Arrangement Scheme, unless another creditor tries to lawful enforce their debts. This can place you at a disadvantage, as in the Debt Arrangement Scheme all debts can be included, with interest and charges frozen, which does not happen in a conjoined earning arrestment.
Can Earning Arrestments be taken from Sick Pay?
Can a wage arrestment be taken off your sick pay?
Yes, it can. This is because sick pay, even Statutory Sick Pay (SSP) is treated as income and a wage arrestment can be taken from your sick pay.
However, if all your receive is Statutory Sick Pay, as the current amount payable is only £99.35 per week, this means nothing can be taken as the first £130.73 is protected.
However, If you are in receipt of contractual sick pay, which is an increased amount, payable over and above SSP, you may have to pay something.
To see how much, view the earning arrestment tables.