Charge for Payments

Charge for Payments

Charge for Payments are legal documents that are 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 debtor 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 serve on the debtor.
The debtor then has 14 days to pay the debt in full. If the debtor fails 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 instalment plan with the creditor and prevent them taking any further action, whilst it is being maintained.

How to Stop a Charge for Payement 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 instalment plan with the creditor and providing it is maintained, will prevent a Charge for Payment being relied upon for any further action.

Comments

  1. 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.

  2. 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.

  3. 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.

  4. 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.

  5. 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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