Debt Recovery Scotland - Where an order for payment is granted in a court or tribunal, this will not automatically result in payment. The order will need to be enforced against the debtor and his or her assets. One method of enforcing an order for payment is by executing an arrestment.
What is an arrestment?
A form of diligence where a creditor with a court order can arrest the debtor's moveable property where that property is in the hands of a third party, e.g. arrestment can be used against money held in a debtor's bank account(s).
How is it done?
A schedule of arrestment is served on the third party by a sheriff officer, e.g. a bank, preventing funds being released to the debtor. If you know which bank the debtor holds an account with, the arrestment can be served on that particular bank. If, however, you are unaware of which bank is being used, a general bank arrestment can be served on the 4 main banks in the hope that the debtor holds an account with one of them. A general bank arrestment costs a little more than a single bank arrestment.
How much debt could I potentially recover?
If funds held by a bank are arrested, there is a minimum amount which is protected from the arrestment. This is known as the protected minimum balance (PMB) and only the balance above that sum can be arrested. The PMB for funds is currently £529.90.
The bank must disclose relevant information to the creditor within 3 weeks of the arrestment being served. If a bank fails to make the relevant disclosure they can be ordered by the court to pay the creditor the lesser of either;
- the sum due by the debtor to the creditor, or
- the amount representing the minimum protected balance
The debt owed by the debtor will be reduced by this amount and the arrestee will not be able to recover this sum from the debtor. Perhaps unhelpfully, a bank does not need to disclose to the creditor if no funds have been arrested.
Where funds are arrested, they are automatically released by the bank to the creditor 14 weeks after the date the arrestment is carried out.
A debtor, bank or third party may challenge the order by applying to the Sheriff. If a notice of objection is lodged, a hearing will be held within 8 weeks of the notice being given. If the objection is upheld, the sheriff can order the arrestment to be restricted (only a proportion of the funds are given to the creditor) or recalled (where the funds are returned to their original position).
Bank arrestment can be a very effective way of dealing with debt recovery Scotland. If you would like any advice on how to implement a bank arrestment or any other enforcement action get in touch.
