The 22nd of April 2009 brings in significant changes to rules relating to arrestment and actions of furthcoming. The Bankruptcy and Diligence etc (Scotland) Act 2007 (Commencement No. 4, Savings and Transitionals) Order 2009 brings into force Section 10 of the 2007 Act which inserts Part 3A into the Debtors (Scotland) Act 1987. The provisions coming into effect include:
- The requirement that a debt advice and information package be served on the debtor if they are an individual. If this is not done within the requisite time period the arrestment will cease to have effect.
- Funds arrested will be limited to the amount due to the creditor.
- A protected minimum balance in bank accounts will be introduced where the debtor is an individual. This will be equal to the net monthly earnings from which no deduction would be made under an earnings arrestment (currently £370). These provisions apply to both arrestments in execution of a judgment and arrestments on the dependence of an ongoing court action if the arrestment attaches funds of a debtor held by a bank or similar financial institution.
- The arrestee (e.g. a bank) will now have a duty to disclose to the creditor the existence of and the value of assets attached by an arrestment. However, where nothing is arrested there is no obligation to provide a 'nil' return. Disclosure must be made within 3 weeks of the date of the arrestment being served on the arrestee.
- If an arrestee fails to make a disclosure in relation to an arrestment in execution they can be ordered by the court to pay to the creditor the lesser of either (i) the sum due by the debtor to the creditor or (ii) the amount representing the minimum protected balance. The debt owed by the debtor will be reduced by this amount and the arrestee will not be able to recover this sum from the debtor. In an arrestment on the dependence of an action failure to disclose information can be treated as a contempt of court.
- A separate court action (of furthcoming) will no longer be necessary for the release of funds arrested. Funds will be automatically released after 14 weeks if no objection is lodged.
- A debtor, arrestee or third party may apply to the Sheriff by notice of objection for an order recalling or restricting the arrestment of funds and there are certain grounds upon which this objection must be based. If a notice of objection is lodged, a hearing will be held within 8 weeks of the notice being given.