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Tackling your debts

Debts in Scotland – what is diligence?

Posted 17 September 2016

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What exactly is diligence? If you’re dealing with debts in Scotland, it’s important to understand this key term.

Diligence is the Scottish term for enforcing a debt. This means your creditors can take certain steps to try and recover the money if you haven’t paid what you owe. In this blog, we’re going to explore the different types of diligence and what you can do about it if you’re in this situation with your debts. 

When can creditors start diligence? 

A creditor is only allowed to start diligence after a certain point – they must have a court decree enforceable in Scotland before they can take this kind of action. 

In many cases, the creditor also has to give you a Charge for Payment before they can start diligence. A Charge for Payment is a formal request for payment and you’ll normally have 14 days to repay the money you owe. It will outline exactly how much you need to pay including any interest and charges. If you don’t pay the money back within the 14 days, the creditor can start to take further legal action. 

Diligence can happen if you fall behind on income tax and council tax, as well as on unsecured debts but a creditor will need a summary warrant before they can take enforcement action for these types of debts. The summary warrant is a certificate from the sheriff court which confirms the amount of council tax that you owe. Only public creditors, like HMRC, can use summary warrants so unsecured lenders such as a credit card company wouldn’t use one. 

Your creditor should also have sent you a Debt Advice and Information pack before they start any kind of diligence. This is to make sure that you understand the position you’re in and what your options are going forwards to deal with the debt. If you’d like to look at this pack now, click here.

 

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What happens when a creditors uses diligence? 

A creditor can use diligence in a few different ways. For instance, they can get something called an earnings arrestment. If you have an earnings arrestment, money is taken straight from your wages before you receive them. Your employer will make deductions from your wages and send the money onto the creditor. 

Or, your creditors can go down the route of getting a bank arrestment. In this case, your account would be frozen until you give permission for money to be released from it to cover the debt. If you don’t give permission for this, the creditors can raise something called a ‘forthcoming action.’ This is when they order your bank to release funds from the account whether you have given your permission or not. 

Another way for a creditor to use diligence is for them to get an attachment of property. This is where the creditor takes and sells items that you own and puts the money towards the debt. It’s important to make a distinction between seizing property inside your home and taking items outside your home because they are treated as two different things. If a creditor was to try and take items inside your home, this is referred to as an exceptional attachment order (EAO). 

What can I do if creditors have already used diligence?

Facing the prospect of diligence can be a very scary position to find yourself in, but there are things you can do to try and turn the situation around. 

If one of your creditors has started to use diligence because they have a summary warrant or court decree (for a debt less than £25,000), you can sometimes apply for something called a time to pay order. This is allows you to repay the debt in monthly instalments whilst protecting you from further diligence from the creditor. If a creditor has already started taking money out of your wages, a time to pay order will stop this arrestment of earnings. 

There are debt solutions available that might be able to help if you live in Scotland and can’t repay your unsecured debts. Some debt solutions like Trust Deeds and Debt Arrangement Schemes (DAS) allow you to repay all of your debt but at a lower, affordable level. Other solutions like sequestration and Minimal Assets Process (MAP) can suspend your payments altogether (you may be have to pay something towards your debts on sequestration if your Trustee can see that you can afford it.) Which debt solution you end up on just depends on your personal circumstances. 

If you know that you won’t be able to meet your repayments on your unsecured debts going forward, it’s really important that you look into the debt solutions out there. It doesn’t have to get to the point where creditors are trying to take items or taking money straight out of your wages – you can stop it from getting that serious. 

Make sure you get professional debt advice and find out which debt solution can help you. Having a plan in place can mean that you can avoid diligence and repay your debts in a realistic and affordable way. You can get in touch with our advisors today using the options on the left of the page. 

 

 

by Christine Walsh

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.