Scotland’s statutory debt solutions and diligence: policy review response

Debt Advice and Information Packs should be streamlined and provided in a hard copy at the commencement of court action and in the case of summary warrant process, when the summary warrant notice is issued by the creditor. If this is adopted individuals would be able to take advice that may prevent them from having judgments or warrants granted against them.

Diligence schedules could be amended to include a web address where a DAIP may be viewed or downloaded.

It is essential that the Society of Messengers-at-Arms & Sheriff Officers are involved in any review. This is also an ideal opportunity to review and simplify forms and schedules as the extensive content of some forms and schedules can be overwhelming.

Review is a positive thing. It is important that the balance is struck between providing meaningful information without overburdening the recipient, as too much information can be overwhelming and lead to confusion

Whilst undertaking the proposal suggested in 1.4, this review should encompass review of the necessity for sheriff officers to send post copies of documents following deposited hand service. These post copies are confusing for the public and are an ecological burden that serves no purpose. The environmental impact of the amount of paper used for these post copies is enormous. Such copies are not required for Court of Session actions

In relation to Moratoriums on Diligence, it should be incumbent on the debtor to notify his creditors of the granting of a moratorium. There are flaws in the functionality of the search facilities of the AIB register such as there is no provision to link forwarding or former addresses, therefore, there is a danger that creditors having been unable to locate a debtor on the register, may instruct diligence. The current rules are potentially prejudicial towards creditors and officers of court, and as such amendment should be considered

Section 197(3) of the Bankruptcy Rules should be amended to read
(3) While a moratorium on diligence applies in relation to the person—
(a) any charge for payment for any debt owed by the person, will be struck down, or
(b) any diligence to enforce payment of any debt owed by the person, will be struck down,
(c) it shall not be competent to found on any debt owed by the person in presenting, or concurring in the presentation of, a petition for sequestration of the person's estate, or
(d) where an arrestment mentioned in subsection (1) of section 73J of the Debtors (Scotland) Act 1987 has been granted in respect of funds due to the person, it shall not be competent to release funds to the creditor under subsection (2) of that section.

In many jurisdictions in the world the ability to obtain information from governmental departments exists. Without this provision creditors in Scotland are being disadvantaged. There is no good reason to exclude public bodies from providing information following granting of IDOs other than section 223 of the Bankruptcy and Diligence etc (Scotland) Act 2007 which should be amended. Mechanisms already exist for local authorities to request information from government departments under the Digital Economy Act 2017 and The Digital Government (Scottish Bodies) Regulations 2022.

With the increase in disputes involving parties furth of Scotland amendment to rules of inhibition would be best served by aligning the sheriff court rules to Court of Session Rules. 16.12 (4) Edictal Service. Substituting delivering the inhibition to the Sheriff Clerk of the court that granted the decree or warrant, for display on the walls of court (Sheriff Court Website)

Rule 16.12 (4) The execution of such diligence on- (a) an individual who is resident furth of Scotland, (b) a person who has no registered office, other official address or a place of business in Scotland, (c) a person whose residence is not known and cannot reasonably be ascertained, or (d) a person on whom service cannot be executed in a manner permitted under paragraph (2), shall be executed edictally by a messenger-at-arms leaving or depositing the appropriate schedule mentioned in rule 16.15 at the office of the Extractor. (5) Where the execution of diligence is made edictally under paragraph (4), a copy of the schedule left at the office of the Extractor shall be sent by a messenger-at-arms by registered post or the first class recorded delivery service to the place furth of Scotland where the person on whom diligence is executed edictally resides, has his registered office, official address or place of business, as the case may be, or such last known place.

Sheriff Court inhibitions can be competently served in accordance with Rule 5.5 (1) (ii) of the Ordinary Cause Rules
5.5. (1) Subject to the following provisions of this rule, an initial writ, decree, charge, warrant or any other order or writ following upon such initial writ or decree served on a person furth of Scotland shall be served-
(ii) by posting in Scotland a copy of the document in question in a registered letter addressed to the person at his residence or place of business;

The issuing of a DAIP at the time of making an application for interim diligence potentially gives the debtor advance warning and an opportunity to dispose of or move assets. We would suggest that if implemented it should be similar to the existing provisions in the 2002 act with regards to the time periods and in addition in cases where the 15K hearing is being asked to be dispensed with a similar provision should be included to dispense with the DAIP. If implemented, what evidence will be required of the issuing of the DAIP, how will it be intimated, and who will be liable for the cost of service?. As indicated elsewhere the time to issue a DAIP is when the initiating court action is served. We would respectfully suggest that this is more appropriate. Interim diligence by its nature is a preventative measure generally executed immediately before service of the action or contemporaneously with service.

There should not be an automatic option to remit quarterly. Quarterly remittance will have a serious impact on creditors cashflow.

Any ability to vary the sums recovered by earnings arrestment again should be with the consent of creditors and should be dealt with by voluntary deductions out with the scope of an earnings arrestment. Having deduction by earnings arrestment of sums other than stated in the earnings arrestment tables will cause inconsistencies and potentially be problematic for those operating automated salary processing, as programmes are written encompassing the statutory deduction.

We agree there should be requirement on an arrestee to confirm if arrestments have or have not attached funds or goods.

Requirement in sheriff court actions to send post copies of arrestments should be removed. There is no such requirement for Court of Session actions.

Arrestments are by judicial order therefore these functions should remain the responsibility of the courts.

Inhibitions should be extended to summary warrant. DAIP should be provided when applicants issue summary warrant notices to debtors prior to presenting the application to court for the summary warrant. Thereafter reference and or a weblink can be contained in notices and schedules as to where to access a DAIP.

There should be no delay in taking forward residual attachment This should be considered ASAP and separate from adjudication and land attachment as residual attachment will not strike at heritable property.

In principle SMASO are supportive, however Sheriff Officers will not always know the outcome of diligence. SMASO will be happy to work with the Scottish Government to establish mechanisms for the efficient collation of meaningful information.

In relation to the Protected Minimum Balance, and intention to protect a family’s benefit income, moving forward there needs to be further study and clearer, more transparent, and a less arbitrary mechanism for calculating the Protected Minimum Balance and for identifying funds that are alimentary or social security benefits within bank accounts.