Notice of defaults: everything you need to know
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An arrestment of wages is serious, but there may be ways for you to stop it, as there's always help available. Read on to find out more.
If you are unable to keep up with the repayments on a debt then there are certain powers that a lender can use to try and get the money back that they’re owed. One of these ways is an Earnings Arrestment Order. (Please bear in mind that this advice is in relation unsecured consumer credit debt. There are different rules if you owe anything to the State, and anything that you owe on a utility bill. These companies do not need to apply for a judgement and may also be able to take money from your benefits.)
An Earnings Arrestment Order is when the court take a certain amount out of your wages before you’ve received them to put towards a debt that you owe. This is a serious course of action, but it’s important to make clear that it can only happen once the lender has already been granted a court order stating that they are owed the money and instructing you how you’re supposed to pay it back. If you then failed do to so, it may be possible for the lender to get an Earning Arrestment Order.
Arresting your wages may seem drastic, but it is by no means the lender’s first choice and it won’t come out of the blue, as you will be aware of the court order. There are also some very strict rules about how and when they can take the money out of your wages. Let’s look into those in a little more detail.
When would someone get an arrestment of earnings?
A lender can only try and arrest your wages if they had already been successful in getting a County Court Judgement against you (CCJ). The CCJ means that the court agrees that you owe the money and they also outline how you should pay the amount back and the timescale that you’ll have to do this.
Now, the lender would only be able to try and get the money back by taking it out of your wages if you had already missed a CCJ payment. It’s then that the court would arrange the arrestment of earnings and your employer would be legally obligated to comply. Some employers also charge £1 admin fee every time they have to send the money to the court.
Who Can Get One?
As you would imagine, there are some strict rules about how an arrestment of earnings has to work and who can get one. So to make it clear, you wouldn’t ever have an arrestment of earnings against you if you:
• are in the armed forces
• are unemployed or receiving benefits
• are self-employed
• owed less than £50
How do the courts decide how much to take?
You will have to fill in an income and expenditure form to show what you’ve got coming in and what you’ve got going out. The court will decide how much you should pay towards the debt from the details that you provide and they should make sure that it is affordable and sustainable.
You’ll also have to give your employer’s details so that they can be contacted if necessary. If you don’t provide this information the courts can ask HMRC to provide it so ignoring it doesn’t mean it won’t happen, it just means you will lose the opportunity to make the payment affordable.
Can an Earnings Arrestment Order be stopped?
It is possible, in the right circumstances to stop an arrestment of earnings. If, for instance, you believed that receiving one would lead to you losing your job, you could apply for the arrestment to be suspended. It’s unlikely that an employer would dismiss you as a result of having your wages arrested, but each employer is different and if you genuinely had reason to believe it would jeopardise your job then the court may decide it’s too risky to go ahead.
Even if you are successful in getting your arrestment suspended, the repayments to the lender would have to start up again. If you failed to continue your payments to the lender, then the arrestment of earnings may go ahead again.
If it becomes possible for you to pay the debt when you get the forms asking for your income and expenditure details, and you pay it off, the arrestment of wages has no reason to go ahead. This means any planned action will be stopped there and then. Even if you can’t pay the debt in full, a lender may still be open to receiving payments in instalments, even at this late stage.
Will it stop if I get a new job?
If you get a new job then the arrestment would technically stop, but may start up again with the new employer. It would be a legal obligation for you to give the court your new employer’s details, so that they could decide whether to carry on with the arrestment. If you didn’t it would be a very serious offence and could even result in a fine or prison sentence.
Here at DAC we always want to give you clear and accurate advice about what could happen with your debts, if they remain unpaid. However, it’s so important to point out that in most cases, it doesn’t have to get to the stage where your wages are being arrested.
If you’re struggling to make the contractual payments you agreed to, the sooner you pick up the phone and speak to your lenders about your difficulties the better. You may find that they are a lot more understanding than you imagine and they should try and put you in a position where you can afford your payments. Sometimes this means granting you a payment holiday and sometimes it means accepting a lower amount for a period of time. Normally, your lender wants to receive payments with as few complications as possible – they will usually only decide to go down the CCJ and arrestment of earning route if you stop paying with no explanation and they’ve tried many times to get in touch with you to discuss repayment options.
No matter how tight money is, there is always a way out of debt. If you simply can’t afford the payments you’re being asked to make, or you don’t know the best way to deal with your debts in the long term, then you should consider a debt solution. Our trained debt advisors have been helping people for years and have helped people solve all sorts of financial problems – use one of the options to the left to speak to one of them today. You can also find lots of impartial advice at The Money Advice Service.
by Christine WalshBack to blog home