Bank Arrestment - How to avoid them

What is bank arrestment?

A bank arrestment in Scotland is when creditors attach funds held in your bank account, to have those funds transferred to them to pay your debts. Not all creditors can arrest your bank account. Even where they can, there is no guarantee they will succeed. Bank Arrestments is a form of diligence in Scots Law. This means They are a legal form of debt recovery and must be carried out by a Sheriff Officer or Messenger at Arms. Because Sherriff Officers and Messengers at Arms are both officers of the Court, bank arrestments can only be carried out if your creditors have obtained the Court’s authority to carry out the Arrestment.

How does bank arrestment work?

Bank arrestments are legally known as Actions of Arrestment and Forthcoming and are a two-stage process. The first stage is when the funds are attached. This means your bank is instructed to freeze your funds (this is the arrestment phase). The second stage is when the funds are taken from your account and given to your creditors (this is the forthcoming phase), then the second stage can occur in only two circumstances. The first is when you sign a mandate authorising your bank to transfer them. This can happen at any time after the arrest. The second is 14 weeks after the arrest, when, if no objections are filed, the funds are transferred by operation of law. Regardless of whether you agree to the transfer or not.

How to stop an account arrestment

One way is to negotiate with the creditors that have executed the bank account arrestment. If you can prove you are going through hard times financially, they may release some of the funds, if not all. They will usually want some security such as information on where and who you work for. They will also set up a repayment plan. If you miss a payment they could then do a wage arrestment.

Another tactic you could use is to state that you intend to submit a notice of objection to the court or apply for the arrestment to be recalled or restricted because of it being unduly harsh.

A notice of objection to the court is a formal legal process. It is done by submitting a form to the Sheriff Clerk’s office in your local Sheriff Court. As the action is raised under the Debtors (Scotland) Act 1987 there is no cost to this and the Sheriff Clerk should notify the creditors, your bank, and any other relevant party. It is always worth bearing in mind that if you are unsuccessful, the Sheriff can order you to pay the other parties’ legal expenses in responding to your application. You’ll need to be ready to represent yourself or hire someone to do so for you. You can hire a solicitor (though there could be a fee unless you qualify for legal aid) or a lay representative from your local money advice service or Citizen Advice Bureau.

A protected trust deed

A protected trust deed is a legally binding arrangement in Scotland where you make reduced payments over four years. At the end of this time, your unsecured debts are usually written off. A trust deed is a form of insolvency. This means your unsecured debts need to outweigh the value of your assets, such as a house or vehicle. Unsecured debts include things like credit card debt, personal loans, and store cards.

The benefits of a trust deed are

With the help of an insolvency practitioner (IP), you arrange repayments to your creditors over four years. After this, any remaining debt is written off
Once your trust deed is approved, your creditors won’t chase you for payment or add more interest and charges to your debts, and they can’t take any court action
While you may have to sell some assets, you’re usually able to keep one essential vehicle worth less than £3,000
Although a protected trust deed is a formal debt solution, you don’t need to appear in court