Charge for Payment

Charge for Payments

A Charge for Payment is a  legal documents that is served in Scotland by Sheriff Officers and Messenger at Arms. They are served to formally demand payment of money and give only 14 days to make payment.  If the Charge is not complied with there are consequences.

When can a Charge for Payment be Served?

If a creditor raises a court action for payment of money and is successful in getting a court order (also known as a decree), then they can serve a Charge for Payment to demand full payment of the money.  First, however, they must extract the decree from the court, which they cannot do until 14 days have passed. This is to allow the consumer to appeal the decision if they choose.  If there is no appeal the extract decree can then be take to a Sheriff Officer or Messenger at Arms to be served on the consumer.
They then have 14 days to pay the debt in full. If they fail to make the payment, the creditor can then instruct the Sheriff Officers or Messenger at Arms to take further action. This includes executing:

an earning arrestment;
a bank account arrestment  (a Charge is only required where a summary warrant has been used); or
an attachment of property held outside the debtor’s home, including an attachment of a vehicle;

A Charge for Payment doesn't need to be served to execute an inhibition.

Summary Warrants

A Charge for Payment does not need to be served to execute a bank account arrestment, unless the debt is being recovered for council tax arrears or tax debts owed by HMRC using a Summary Warrant.

Summary Diligence

For certain types of debts, it is not necessary for the creditor to raise a court action before they serve a Charge for Payment. This is possible for debts which are not regulated by the Consumer Credit Act (such as credit cards and bank loans) using a procedure known as summary diligence.

To use the summary diligence procedure, the debtor must explicitly consent to the procedure being used when they take out the debt and it is most commonly used for debts which have been taken out when someone is acting in the course of a business, or where the debt is for a landlord’s guarantee or for a credit union loan.

The summary diligence procedure allows a creditor to register a debt for preservation and execution with the courts, most commonly in the Books of Council and Session. When the creditor believes the debtor has defaulted on the agreement they can extract the registered debt from the Books and deliver it to a Sheriff Officer or Messenger at Arms and instruct them to serve the Charge for Payment. Where the debtor disputes that they were in default, they can challenge the competency of the Charge, by applying for it to be suspended and reduced, whilst interdicting the creditor from taking any further enforcement action on the strength of it. This, however, is a complicated and legal advice should be sought from a solicitor.

Apparent Insolvency and Bankruptcy

A Charge for Payment is also an important document legally, as once it expires, it makes the debtor apparently insolvent.  This is a legal term, but importantly means the creditor (or indeed another creditor) can raise a petition for the sequestration (bankruptcy) of the debtor, providing the other conditions for making someone bankrupt have also been met. To use an expired Charge for Payment to sequestrate a debtor, the creditor must do so within 4 months of the Charge expiring.

Although to sequestrate a debtor a creditor must show £3,000 or more is owed by the debtor, it is not necessary for the debt contained in the Charge for Payment to be more than £3,000. The expired Charge proves apparent insolvency. Providing the creditor can show in total, including what is owed in other debts, is more than £3,000, the Charge can be relied upon in any bankruptcy petition.

How to Prevent a Charge for Payment being Served

If it is feared a creditor may serve a charge for payment, there are certain steps that can be taken to prevent them from doing so.  First, a statutory moratorium can be registered with the Accountant in Bankruptcy office, providing one has not already been registered within the last 12 months. This prevents creditors from taking any further enforcement action for a period of six weeks. This is a free process and can be done relatively quickly. Statutory moratoriums’, however, only allow some breathing space and it is incumbent on the debtor to obtain advice to find a more long-term solution.

Alternatively, where a court action has been raised, a Time to Pay Direction can be applied for before the court grants decree. If this is allowed by the court, it allows the debtor to enter an installment plan with the creditor and prevent them taking any further action, whilst it is being maintained.

How to Stop a Charge for Payment being used after it is Served

Again, a statutory moratorium can be used, even after a Charge for Payment has been served and has expired. Again, this is only possible if it has not already been used in the past 12 months and only allows six weeks breathing space to allow for a more permanent solution to be found.

Alternatively, even after a court order has been awarded, or a summary warrant granted, the debtor can apply for a time to pay order, which again, allows the debtor to enter an installment plan with the creditor and providing it is maintained, will prevent a Charge for Payment being relied upon for any further action.

Can the Debt Arrangement Scheme be used to stop a Charge for Payment?

The Debt Arrangement Scheme (DAS) as a remedy, can be used to stop a Charge for Payment being served. As soon as an application has been made,  no Charge can be served for any debt that is included in the DAS. If the DAS is approved, the protection continues.

Comments

  1. Charlie

    Hi there,

    I am looking for advice.

    I am a student and have been sent a charge for payment for council tax arrears.

    I was under the impression I had already applied for council tax exemption.

    I have however done this again now and put in the dates which I started university after receiving this letter.

    I am worried, however, as this payment is unfair and I do not owe this money.

    I haven’t ever had a letter from Council Tax this year stating that I haven’t paid.

    The council tax office don’t have my bank account details as I have never had dealings with them. Is it still possible they can arrest my bank account?

    I don’t work and rely on student loan to support myself and my 2 children.

    What can I do from here?

    Thanks in advance

    1. Scottish Adviser Post author

      Hi Charlie

      As your dispute relates to your liability and whether a Student Exemption Application has been properly applied, submit a letter of complaint to the Council and ask they place any further action on hold until your complaint is dealt with.

      I am assuming you live on your own and there is no other liable adults living in your home (otherwise it would be a Student Discount you applied for – 25% – although even if that is the case, depending on the circumstances of the other adult, they may be able to apply for Council Tax Reduction).

      I am also assuming you were a Student since April 2019, as that’s when the new financial year will have begun.

      Council Tax Bills should have been sent out in February or Match 2019, so if you haven’t received any correspondence, mention that in your complaint.

      The Council should deal with the complaint within 2 months. If they don’t or if they do and you are not happy with their proposed resolution of it, you can appeal it to the Valuation Tribunal.

      Just as a further piece of information, they will have wanted a stamped letter from you Insitute of learning as proof of your participation on your course. Do you know if you provided them with this. If you didn’t, I would speak to your University for proof of your enrolment on this course and give it to the Council and ask they backdate your exemption/discount to the date You began on the course.

      I am also assuming the arrears are for this financial years and do not relate to previous years.

      Finally, whilst the Charge for Payment is active and has not been put on hold there is a risk the Council could carry out further Diligence.

      If they don’t know where you bank account is this may make it more difficult for them, but bank account arrestments are only one of many options available to them.

  2. Sarah

    Hi,
    I’ve just had a charge for payment through the door. It is for credit card, which I was unable to pay off when I lost my DLA and associated premiums.

    The decree was granted in December 2018.

    I an not working due to ill health.

    I care for husband who has a long term MH illness.

    We’re on benefits with no other income and live in a council house, no assets.

    What can they do if I have nothing?

    1. Scottish Adviser Post author

      Hi Sarah

      In theory they should not be able to do much. They cannot arrest your wages as you have none.

      However, they could try and freeze your bank account. If they do they could try and take anything over £529.90, the protected minimum balance.

      This could be challenged, but it is a lengthy process and unless it is, it will stand. If you have less than £529.90 in your account, it will fail, but you could get a £25 bank charge.

      I am assuming you don’t own a car.

      Depending on how much you owe you could be made Bankrupt, but if you are on benefits you won’t have to pay anything.

      The thing to remember is this debt will continue to increase, by at least 8% per annum and every time they try to do something, like serve a Charge for Payment they will add fees.

      I would suggest you contact your local Citizen Advice Bureau or Local Authority Money Advice Service and ask if they can write to them to explain your situation.

      If they are aware of it, the firm may be willing to give you some breathing space.

  3. Biz

    Hi,
    I have received a Charge for Payment for Business Rates on a property that my business used to rent until October 2018.

    But they have obtained the Charge for Payment in my name personally, while it was the company that operated the business from that address.
    Is this correct or should it have been in the business name and not me personally?
    If so, then what do I do to challenge and correct it.
    Thank you

    1. Scottish Adviser Post author

      It will depend whose name the lease was under. If it was your name then you will be personally liable for the business rates.
      If it was in the name of the business, it will depend on the type of business. If you were a sole trader, you will be held personally liable.
      If it was a partnership, partners can be held personally liable for the debts of the Partnership; if it was a limited company, then the Company is liable.
      You can get free advice and assistance from the Business Debt Helpline, who are a Charity.

  4. Thomas

    Hi,

    I got a council parking fine, and I moved home, they sent the letters out to my old address and then served a charge for payment at my old address.

    It wasn’t until I got a bank charge for a failed bank account arrestment I was made aware of all this.

    I was told when they served the charge they made enquires and confirmed I lived there and posted it through the door, but I hadn’t lived there for more than 2 years.

    I got the parking fine and I will pay that, but is there anything I can do to dispute the charge for payment?

    Cheers,
    Thomas

    1. Scottish Adviser Post author

      Hi Thomas

      I don’t think so.

      They were entitled to serve a Charge after they got the court order. You could argue it wasn’t properly served, but that would require an action in Court (which would cost money and a lawyer and in my opinion would not succeed as they would argue they served it at your last known address and made appropriate enquiries).

      Unfortunately, these debts can quickly increase if you don’t settle them within the first couple of weeks, when you normally can pay a reduced amount.

      If you are struggling with the full amount, call them and set up a repayment plan so they don’t take further enforcement action and add more fees. As they will.

      1. Kirsty

        Hi

        I am encountering the same issue.

        The creditor have had my details previously.

        Will this impact my credit file, despite little effort to try and contact me at my proper address?

  5. JOHN

    It is Hmrc and the date says sept 2019. A typo on their behalf.

    1. Scottish Adviser Post author

      Hi John

      If it is HMRC, I am presuming they have served a Summary Warrant, as this is normal for them. If you check the Charge for Payment it should say this on it, rather than a decree.

      If it is a Summary Warrant, they were required to serve the Charge before doing the bank arrestment.

      The fact the Charge has the wrong date on it, is significant in my opinion as the date of a Charge for Payment is legally very important, as it’s from the date you can tell when they were allowed to take certain actions.

      For that reason I think you could raise an objection through the Sheriff Court on the grounds the arrestment is incompetent, as the Charge it was executed on contained significant errors as to the date.

      You do this by raising a notice of objection through the Sheriff Court. The cost of raising the action is free as it is done under the Debtors (Scotland) Act.

      See my page on challenging a bank arrestment here.

      I cannot obviously guarantee you will succeed, but I personally think you have a strong case and the funds arrested should be released to you.

      The problem is they will probably serve another Charge for Payment and also try and arrest your account again.

      You do need to think, therefore, about how you are going to address this debt and speak to a money adviser. They may suggest using the Statutory Moratorium procedure, whilst you consider all your options. Timing, however, is crucial, so I would suggest you get advice. They may also be able to help you submit your notice of objection.

      Find your local Citizen Advice Bureau here or contact your local Council and ask about their money advice services.

  6. JOHN

    Hi

    I received a Charge for Payment from sheriff officers. It said on it, that it was issued on September 2019

    That is an error.

    I complained that the date is wrong, but they still arrested my bank account.

    Is the wrong date on a Charge for Payment grounds for appeal?

    1. Scottish Adviser Post author

      Hi John

      Quick question, if you don’t mind. What is the debt for?

      The reason I ask is if the debt is for Council Tax or a HMRC debt, where a Summary Warrant has been issued, a valid Charge for Payment has to be served first. If it is not for one of those types of debts, a bank arrestment does not require a Charge for Payment to be served first.

      So even if the Charge was invalid, the bank arrestment could still be valid.

  7. John

    Hi

    I was issued a Charge for Payment a while back and came to an arrangement to pay the creditor, but have been unable to do this.

    Am I able to do a Moratorium to prevent any arrestments?

    Debt advice have said it will not work, because action has already been taken.

    1. Scottish Adviser Post author

      Hi John

      There is no reason you cannot use a Moratorium, even if a Charge for Payment has previously been served and expired.

      What it cannot do is reverse what has already happened: the serving of the Charge, but it can still stop:

      Bank Arrestments;
      Earning Arrestments;
      Attachments;
      Exceptional Attachment Orders; or
      Even a creditor raising a petition for your sequestration.

      The risk of someone trying to make you bankrupt may be reduced if the Charge was served over 4 months ago, as Creditors who want to use it to make you bankrupt have only 4 months to do so, then they need to serve another.

      Remember, though, the Moratorium is only a short term solution that lasts 42 days and can only be used once in any 12 month period.

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