Factoring Chasing the Debt Fiona Greer, Associate Recovery Can - - PowerPoint PPT Presentation

Factoring – Chasing the Debt

Fiona Greer, Associate

Recovery

Can you pursue the debt?

• Element of prescription
• Any debt over five years old will have

expired

How do I recover the debt?

• Notice of Potential Liability
• Seven day final demand letter
• Court action

Notice of Potential Liability

• Tenements (Scotland) Act 2004
• If owner sells NPLC will flag up
• utstanding debt to potential purchaser
• Buyer assumes liability for debt if not

cleared

• Valid for 3 years then re register
• Registration fee £60
• Pre-Court option

Seven Day Final Demand

• Letter to owner requesting payment failing

which court action

• Court will want to see steps have been

taken to resolve matter without involving them!

• Could have an effect on any eventual

award of expenses

• Recorded delivery or Sheriff Officers (not

a requirement)

Court Action – Type of Action?

Sheriff Court Procedure: How much is the debt outstanding? < £3000

• SMALL CLAIM

< £5000

• SUMMARY CAUSE

> £5000

• ORDINARY CAUSE

Court Action – Owner’s Response

Possible responses from the owner….

• 1. Does nothing
• 2. Admits the claim and settles the case
• 3. Admits the claim and makes a written application

about payment (instalment proposal)

• 4. Admits the claim and attends court to make an

application about payment

• 5. Disputes the claim and attends court for a fight!

Decree Granted – Whats Next?

• 1. Charge for Payment
• 2. Earnings arrestment
• 3. Inhibition
• 4. Arrestment
• 5. Attachment
• 6. Sequestration

Charge for Payment

• Formal written demand for payment
• Give period of 14 days to pay debt
• Charge will list debt, interest, court

expenses and sheriff officers expenses

Charge for Payment

• First step of diligence and must be served

prior to an earnings arrestment, arrestment or attachment

• Lets debtor know serious implications of

the debt as they will be visited personally by Sheriff Officer

• Allows officer to investigate potential

recovery prospects

Arrestment

• Freezing of funds in the hand of a 3rd

party, quite often a bank, or a tenant!

• Usually speculative
• Can be carried out quickly (although a

charge for payment must be served first)

Bank Arrestment

• Can prompt debtor into quick arrangement
• Banks have duty of disclosure
• Debtor has to release sums arrested

within period of 14 weeks

• Can only arrest funds in excess of £460.06

Earnings Arrestment

• Compels employer to deduct a set amount of

money from a debtors net salary or wage on each pay day based on table of deductions

• Protected Minimum Balance
• Payments can be made directly to creditor
• Continues until debt is paid or the debtor leaves

employment

• Only one earnings arrestment can be in force at

any given time, although an application can be made by way of a conjoined arrestment for a share of the deductions between two or more creditors

Inhibition

• A preventative diligence that stops the sale or

completion of sale of heritable property.

• Previously only available through the Court of

Session; can now obtain authority to inhibit through a Sheriff Court decree

• Lasts for 5 years
• “Arm twisting” diligence – debtor cannot sell

property whilst the inhibition exists

• Not a quick fix though

Attachment

• Previously only available in domestic

situation outside of persons residence, ie. a car in driveway or goods in a garage or

• uthouse.
• Does not cover goods subject to hire

purchase or rental agreements

• Most household goods are protected.
• Attached goods valued at second hand

goods sale room value

Money Attachment

• Could be useful when pursuing

commercial owners but doesn’t apply to residential premises

• Sheriff Officers can turn up unannounced

to premises and attach cash, followed up with a report to Court

• Creditor then applies to court for money to

be released

Sequestration

• Is bankruptcy still a threat?
• Worth it if person has assets – if not, it

may be a welcome get out clause

• Court proceedings have to be raised by

solicitor – either debtor or creditor can apply

Sequestration

• Court hearing is fixed and debtor requires

to attend or be represented

• Trustee is appointed by court to

administer the debtors estate on behalf of all creditors

• Debt has to be over £3000
• Automatic discharge of debtor after 1 year

(can be extended)

Debtor Protection

Other forms of protection available to debtor which may restrict your right to pursue debt:-

• Debt Arrangement Scheme
• Protected Trust Deed

Any questions?

Fiona Greer Email: fjg@tcyoung.co.uk Tel : 0131 220 8746