Susan has been struggling to keep up with her finances and her bank account is taking a hit. She has been off work following a tough divorce that saw her fork out for a top of the range legal team. Now she’s out on her own with a depleted savings account, Susan’s debt has been piling up as she battles to pay off her mortgage, car finance, taxes, and credit card debts.
To make matters worse, Susan has just received a “charge for payment” from a sheriff officer that requires her to repay all the debt she owes – within the next fortnight.
The whole situation is becoming all too much for Susan. She has no way of paying all her debt back within the next two weeks! Plus, she’s never even heard of a charge for payment, let alone know what her options are.
If you have recently received a charge for payment, this article will help you get to grips with the full extent of the situation, as well as making you aware of the consequences of not paying your debt on time. We’ll talk about the steps you should take after receiving a charge for payment as well as some options you have to postpone receiving one.
What is a Charge for Payment?
A charge for payment is a legal document that demands debtors to pay the money they owe.
In Scotland, charge for payments are served to debtors by sheriff officers. After being served, debtors are given 14 days to pay the full amount owed or risk the sheriff officers taking further enforcement action against you.
The total amount to be paid includes the original debt alongside any interest or extra charges that have incurred over time.
Charge for payments can also put the wheels in motion for creditors to initiate the bankruptcy process.
However, if you respond to your charge for payments quickly, you have the chance of getting into your creditor’s good books. A fast response may help you if you plan to request to receive additional time to pay your debt back through a series of monthly instalments.
If your debt is a result of falling behind on your council tax or HMRC debt, HMRC or local authorities have the right to issue a summary warrant to retrieve the money faster.
Once the summary warrant has been granted by the sheriff court, the HMRC and local authorities can then serve you a charge for payment.
It is a faster process because there is no need for a court hearing. If you get confused, just remember that a summary warrant is the equivalent of a court order but can only be used for council tax and HMRC debt.
What should I do if I am served a charge for payment?
Ignoring your charge for payment is not an option. If your debt has not been repaid within the fortnight, further action will be enforced against you. Seeking advice and acting as quickly as possible is crucial.
If you respond to your charge for payment quickly you may have the opportunity to apply for a time to pay direction (TTPD). You can ask a judge for a TTPD when your creditor has taken you to court regarding your unpaid debt. By applying for a time to pay direction you cannot dispute that you owe the money and you are admitting the existence of your debt.
If accepted, you should be given extra time to repay your debts by means of a deferred lump sum or fixed monthly instalments. You will also be protected from further action by the creditor if you adhere to the terms that have been agreed. You do have to be on the ball though – if you miss two payments you are liable to further creditor and court action.
If you are unsuccessful with your application, the creditor has the right to enforce diligence measures against you (see the next section for information on what these measures are). It’s also important to know that if the person you owe the money to objects to your application, you will be taken to court for a judicial hearing.
You should only apply for a TTPD if you are willing to accept that you owe the debt in question with the creditor. However, if you are accepting of the debt and you comply with the court order this may be a genuine option for you.
Once granted, the TTPD ensures that creditors can’t force a sheriff officer to serve you a charge for payment. It also blocks creditors from raising an appeal for your bankruptcy once your charge for payment has expired (more about this later on in the article). It also prohibits creditors from carrying out earnings arrestments on you.
What happens if I fail to pay within 14 days?
If you fail to repay the agreed amount within the 14 day time limit, sheriff officers are likely to enforce diligence methods to recover the money you owe. This can work in a number of ways depending on your personal situation and how much money you owe.
Diligence methods include:
Earnings Arrestment where they recoup money from your wages to repay your debt.
Freezing your bank account.
Executing an “attachment of property” to remove items that are outside of the debtor’s home.
Executing an “exceptional attachment order” to remove items from both outside and within the debtor’s home.
You’ll receive a notice from the sheriff letting you know they’ll be visiting your home to remove goods to make up the value of the debt you owe if this is the route the court decides to take.
Bankruptcy and Charge for Payments
Failing to follow up or comply with the charge for payment means you might have to be sequestrated because you’ve become classed as insolvent.
Sequestration is effectively the Scottish word for bankruptcy. During sequestration, your assets are transferred to a trustee who organises their sale to make up the money you owe your creditors.
A charge for payment is a powerful legal document that can initiate the process of sequestration. Once your 14 day time limit expires, you are classed as “apparently insolvent.
Apparent insolvency is a legal term for a person who is unable to pay their debts as they are due. When you become insolvent, your creditor can raise a petition to the court to sequestrate you. If all other bankruptcy conditions have been met, the creditor has 4 months after the charge for payment has expired to sequestrate you.
If the process takes longer than the 4 month period, the charge for payment must be served again. It’s also important to be aware that the amount you owe to the creditor has to be in excess of £3,000 for you to be sequestrated.
Is there anything I can do to postpone my charge for payment being served?
If you have a hunch that you might be served with a charge for payment you can apply for a statutory moratorium. A statutory moratorium is safety net in Scottish law that gives you six weeks protection from a sheriff officer taking any further action against you. It also prevents a creditor from making an application for sequestration until the moratorium expires.
The process is free and registration can be confirmed on the same day as your application. You can only apply for a statutory moratorium once every twelve months so be sure to seek professional advice to ensure you are registering at a suitable time.
Seeking the advice of an industry professional will make you aware of the next possible options to help with your debt recovery. Potential solutions that are enhanced when used alongside statutory moratorium include:
Debt Arrangement Scheme
The Debt Arrangement Scheme (DAS) is a viable option if you don’t want to declare bankruptcy or enter into a Protected Trust Deed.
The DAS allows you to repay your debts at a rate that suits you by halting creditors harassing for payments, as well as freezing all interest rates and penalty fees attached to your debt.
If you apply for a Debt Arrangement Scheme during the six week period of your statutory moratorium, your protection period will be extended up until the approval of your DAS application.
The Statutory Moratorium also allows you to apply for a Trust Deed from your creditors.
With a Trust Deed, an appointed trustee takes control of your assets so you can repay as much of you debt as possible over a period of monthly payments. Once your Trust Deed comes to an end, your debts are permanently written off and you can’t be chased up by your creditors anymore.
There is a huge benefit to using the statutory moratorium process in conjunction with a Trust Deed.
If you apply for a Trust Deed without being registered for a statutory moratorium you are not immediately protected until your creditor(s) agree to it. As you’re not fully protected you are still susceptible to action being taken against you over the potential five week waiting period. However, if you are registered for statutory moratorium you are exempt from further action during those five weeks.
The Debt Arrangement Scheme and Trust Deed will both prohibit any earnings arrestment that have been launched against you before you started using the statutory moratorium process.
Who can I talk to?
If you have been served with a charge for payment or are struggling to understand the complexity of the charge for payment procedure, please don’t hesitate to reach out for further information.
At Scottish Debt Experts we are here to help and offer guidance to anybody struggling with debt or seeking debt advice. It often takes just one phone call to clear things up.
We’re available by telephone, email or face to face if you prefer and will always arrange a call back within 24 hours. Email us at email@example.com or phone us at 0141 483 7477 between 9am-5pm Monday to Friday. You can find all our contact details at http://www.scottishdebtexpert.co.uk/contact-us/
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1 According to the Annual Report from the Accountant in Bankruptcy. (https://www.aib.gov.uk/about-aib/statistics-data/aib-annual-reports-1986-present)
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