What is a charge for payment?
Charges for Payments are legal demands for payment, served by Sheriff Officers and give 14 days to pay off debts. If you fail to make the payment, the Sheriff Officers can then use the Charge to take further enforcement action.
Creditors can also use it to make you bankrupt.
In 2017/18, over a quarter of a million Charges for Payment were served across Scotland, with almost 200,000 for Council Tax debts and approximately 8,000 for HMRC debts.
Another 45,000 were served for debts such as credit cards and personal loans.
What makes a Charge for Payment important?
The reason a Charge for Payment is important is that it is not just another demand for payment, such as those sent out by debt collection agencies. Charges for Payment are legal documents and are only served after a creditor has taken you to court and obtained a court order stating you owe money; or in the case of Council Tax and HMRC debt, a Summary Warrant, which is the equivalent of a Court Order.
Charges are usually hand delivered also by Sheriff Officers, although if you are not in when they visit, they can deliver them by posting them through your letterbox.
If you fail to pay the amount that the Charge for Payment states you have to pay, Sheriff Officers are then able to
- Arrest your wages;
- Freeze your bank account; or
- Execute an attachment on property kept outside your home.
For Council Tax and HMRC debt, none of these things can happen until a Charge for Payment has been served and 14 days have passed without the debt being paid.
In the case of other debts, Sheriff Officers can arrest your bank account without serving a Charge for Payment, but need to serve one before they can arrest your wages or execute an attachment on property kept outside your home, such as against a car.
Charge for Payments and Bankruptcy
Charge for Payments are important also, as once the 14 days expire you are deemed to be Apparent Insolvent. This is important, as Apparent Insolvency is one of the conditions that must be satisfied before a creditor can apply to the court to make you bankrupt.
Over 1,200 people were made bankrupt in Scotland in 2017-18 using this process.
However, to make you bankrupt, a Creditor only has 4 months after the Charge for Payment is served to raise an application in Court, or he must serve another Charge for Payment.
What should you do if you have a Charge for Payment served?
If you have a Charge for Payment served on you, you should seek advice immediately. The reason for this is creditors rarely serve a Charge unless they are seriously considering taking further action against you.
You, therefore, have to act quickly, as it is not usual for further action to commence soon after the Charge expires.
Time to Pays
One step you can take if you have a Charge for Payment served on you, is apply for a Time to Pay Direction. This is a court order that is allowed for debts up to £25,000 but cannot be applied for if the debt is owed to HMRC.
It basically allows the court to suspend the effects of the Charge for Payment to give you time to pay the debt off by instalments or by a lump sum at a later date.
Although Time to Pays can be useful, it needs to be noted that if the person owed the money objects to it, there will have to be a hearing in front of a Judge. In addition to that, interest is still added at the judicial rate of 8%
Statutory Moratoriums, the Debt Arrangement Scheme and Protected Trust Deeds
Another way to deal with a Charge for Payment is instead to apply for a Statutory Moratorium, Scotland’s breathing space. This is a free process, does not involve the courts and gives you six weeks protection from the Sheriff Officers taking any further action against you or creditors making an application to make you bankrupt.
This then allows you to get the advice you need so you can consider all your options, which could include applying for a Debt Payment Programme under the Debt Arrangement Scheme or a Protected Trust Deed.
The benefit of both these remedies is they prevent further action being taken and unlike Time to Pay Directions, are not just for one debt, but all your debts. Also unlike Time to Pay Directions, the Debt Arrangement Scheme freezes all interest and charges.
If you have had a Charge for Payment served on you and require advice, speak with a Carrington Dean adviser on 0800 043 1320.
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