COURT AND LEGAL ACTION
There are occasions where creditors resort to legal action which can be daunting in some cases.
If you receive court papers you will need to respond within a specified time. In this situation you should carefully check
the details before returning any relevant forms, submitting a defence or asking for time to pay. There are a number of
legal papers that you could receive and the list below is not exhaustive.
Common examples of Court Action
a) Rent. Summons for the Recovery of Heritable Property
b) Mortgages/Secured loans. Calling Up Notices/Initial Writ
c) Council Tax. Summary Warrant/ Attachments/Sequestration
d) Income Tax. Statutory Demand/ Initial Writ/Sequestration
e) Unsecured loans. Credit agreements Small Claim/Summary Cause/Ordinary Cause actions
f) Hire Purchase
Apart from the above there are other forms of legal action that can be taken when creditors pursue authority to recover
their debts and you should not hesitate to get advice.
If you have ignored any legal documents that you have received you may still have the time to stop further action by the
lender, including eviction, in this situation GET ADVICE from the Citizens Advice Bureau or an alternative agency.
Rent (Scottish Secure Tenancies)
Summons for the Recovery of Heritable Property.
The court will only grant an order (decree) if it is reasonable to do so. It is important to get advice before the hearing date
as there are normally two issues contained in the summons.
1 The landlord is asking for the authority to terminate the tenancy and
2 The landlord is seeking to recover the arrears.
If you fail to reply, by either negotiating with your landlord that he will
'sist' the case (defer the case) to allow you time t
o pay the arrears or if you fail to get the Landlord’s agreement by submitting a reasonable defence to the sheriff or if you
fail to appear or be represented at the hearing then the sheriff will have no real choice but to grant the order that will
allow the Landlord to proceed to evict.
It is not enough to simply use the Time to Pay form that is included with the summons as it does not stop the sheriff
having to give the eviction order.
Mortgage/Secured Loan Arrears
Calling up Notices
A calling up notice on the mortgage requires the borrower to pay not just the arrears on the mortgage or loan but the total
amount of the loan within 2 months. If the total amount of the loan and arrears are not paid within the 2 months, the
lender can proceed to take action to repossess the property.
The borrower has two months in which s/he can apply to the court to suspend the lender's right to possess the home.
Initial writ for sale, possession and ejection
This must be served by recorded delivery or by sheriff officers on all the borrowers.
The initial writ gives the borrower 21 days in which to lodge a notice of intention to defend with the court.
We recommend that legal advice is sought immediately if either a calling up notice or and Initial Writ is received.
Summary Warrant
Local authorities use summary warrants to enforce payment of arrears of council tax. This is an accelerated legal procedure,
where the authority is able to apply to the court to grant this power without any notice given to the debtor other than the
warning letter sent to the liable person/s. Sheriff Officers are engaged to recovery the debt and if no arrangements made with
them, they have the authority to enforce payment, through attaching funds in a bank account, by contacting employers with an
earning attachment. You will not receive any warning of any impending action and it is very difficult to get any of the
attachments lifted so we strongly advise that any council tax arrears are treated as a priority.
Attachment/Exceptional Attachment
Attachment and exceptional attachment are the legal terms now in place which have replaced the old system of poinding.
Before 2002, Sheriff Officers could come into your home and value goods, which could be taken away and sold on the basis of
trying to enforce a court order. It is only on rare occasions that goods inside the home would be used to pay debt under the
new system. There are now two parts to this legal mechanism:
Part one: Attachment
This relates only to goods outside the dwelling house. This includes goods kept in a garage or garden shed, but
not to any
goodsinside the house. Any goods attached would have to belong to the debtor, but proof of ownership would be required, and
not be exempt. A list of exempt items may be found on the Scottish Courts web page.
Part two: Exceptional Attachment
This type of attachment occurs only when creditors are not able to recover debts by any other means. A creditor
would apply to
the sheriff court to remove items inside the house to take to an auction. He would have to persuade the Sheriff that all other
attempts to collect the debt have failed, and that the goods that are subject to attachment will realise enough money to pay
for the expense of taking to auction and give a benefit to the creditor of at least £100.
Before granting an exceptional attachments order, a Sheriff can order that the debtor takes
advice from anapproved
money advisor.
Wages Arrestment
When one of your creditors has either issued a summary warrant or obtained decree, they can try to enforce payment through
contacting your employer, who must by law comply, ordering them to deduct a set amount from your wage/salary. The amounts
deducted are set out by law. Provided the arrestment was instigated by a creditor who had obtained decree, you
can apply to
the sheriff court to have this lifted through a Time to Pay Order, but
not if it is being collected under Summary Warrant.
Bank Arrestment
This type of arrestment is fairly common when there are arrears of council tax and no arrangements have been agreed. Your
bank will receive an instruction from the Sheriff Officer to freeze any funds in your accounts. This applies only to funds held
in the account on the day the attachment has been served on the bank. Any funds deposited later are free from the attachment,
but you will not be able to access the funds frozen. It is very difficult to get a creditor to lift an attachment, and so we
strongly advise that arrears are treated as priority and arrangements made before it reaches this stage.
Statutory Demand
A statutory demand is a legal document that states that if a debt is not paid or an arrangement made to repay the debt the
creditor can take court proceedings to sequestrate. You have 21 days to address the situation. A creditor can serve a
statutory demand whether or not a court order has been made, however the debt must be for £1500 or more for sequestration
proceedings to be instigated. Sometimes a creditor serves a statutory demand on a client as a form of threat without an
intention of starting proceedings. If this is the case then the creditor will be likely to accept an offer of payment by
installments or a partial write-off. This is because the creditor would probably receive less money if the client were
sequestrated.
Statutory demands have to be treated very seriously because of the possibility of sequestration and we
strongly advise that
advice is taken from a specialist money advisor or solicitor.
Sequestration
Creditors are likely to decide to sequestrate the client if there are land or property assets (like a house) which could be
sold if the client is sequestrated. Creditors usually have tried various methods to collect their debt and use this enforcement
as a last resort.
The debt has to be £1500 or more. If you are presented with a sequestration petition you will need to provide a the sheriff
with a good reason why you should not be sequestrated. Specialist advice should be taken immediately.
Summons for Possession & Delivery
This relates to goods bought on hire purchase. In Scotland before a hirer can recovery vehicles bought under this agreement,
they should generally have obtained the court’s permission to do so.
There are exemptions to this depending on the length of time the agreement has been in force and the amount paid. It may be
possible to ask the court to suspend the order providing payments can be made. Specialist help is strongly advised.
Small Claims/Summary Cause/Ordinary Cause
Creditors seeking to enforce payment of unsecured debt through the courts could use one of three procedures. For debts less
than £750 Small Claim: £750 - £1500 Summary Cause; over £1500 Ordinary Cause. Small Claim and Summary Cause procedures
are very similar, they are both less formal than Ordinary Cause allowing debtors to represent themselves. The Scottish
Court Service produce a very good guide on how to proceed and these can be obtained from any of the listed contacts below.
Both offer the debtor time to pay.
Ordinary Cause allows debtor the facility to ask for time to pay provided debts under £10000 but we would advise that legal
assistance is sought where the debt is over £10000 as this is a complicated procedure and lay representation is not allowed.
Fact sheets.
www.scotcourt.gov.uk/sheriff/small_claim/guidelines_notes.asp
www.scotcourt.gov.uk/sheriff/summarycause/guidelines_notes.asp
Collection Agencies
Creditors often employ collection agencies to recover a debt, or in some cases 'sell' the debt to an agency who then tries to
recover it on their own behalf. Pressure may therefore also come from a debt collection agency. Most debt collection agencies
work on a 'no result-no payment' basis. They therefore have to be successful to stay in business. This can mean that agencies
use harassing tactics to collect a debt. In some cases, the debt collection agency can employ sheriff officers in the process
of collecting the debt although they are not at the time acting in their legal capacity as a sheriff officer. Their ID should
show clearly that they are working in the debt collection field and not as an agent of the court. Agents have no right to
enter your home, arrest you wages/bank accounts or take your goods.
Collection Agents are governed by the Office of Fair Tracing’s guidelines and should not make false statements to you or keep
telephoning you several times a day.
Should you believe that a debt collecting agency is committing an offence; the matter can reported the local trading standards
department.
In Scotland, the harassment of debtors is not a specific offence. However, threats of violence or using false pretences, for
example, pretending to be a Sheriff Officer, or threatening criminal proceedings are criminal offences.
If violence is involved, the matter should be reported to the police who can prosecute.
Along with the above there are other forms of court action or papers you may receive in relation to your debts and again, don’t
hesitate get advice if necessary.
If you have ignored court papers resulting in legal action having been taken and the debt has been passed to Sheriff Officers
or for enforcement, you may still have time to stop further action including eviction. If this situation arises, GET ADVICE
from the Citizens Advice Bureau or an alternative agency.
Useful Contacts
Office of Fair Trading (OFT) 0845 722 4499
www.oft.gov.uk
Financial Ombudsman Service 0845 080 1800
www.financial-ombudsman.org.uk
Society of Messengers-at-Arms and Sheriff Officers 0131 225 9110 www.ednet.co.uk/~smaso
Next: Priority Debts