The Debt Arrangement and Attachment (Scotland) Act 2002 came into force on 30 December 2002 and

• creates a national debt arrangement scheme to enable multiple debts to be assessed with the support of money advisers and paid in accordance with a debt payment programme over a period of time
  
  
• provides for attachment, on an exceptional basis, of articles kept in dwellinghouses
  
  
• makes provision for the abolition of poindings and warrant sales, i.e. the seizure and public auction of household goods and personal property, authorised by a sheriff in order to settle and unpaid debt.

The Act provides for the making of Regulations to define the operation of the Debt Arrangement Scheme. The Debt Arrangement Scheme (Scotland) Regulations 2004 have been published in draft form.

The Debt Arrangement Scheme (DAS) will provide a facility for the orderly payment of multiple debts. The Scheme will assist debtors who are unable to settle their debts as they fall due but who have some surplus income (i.e. income in excess of that required for basic subsistence) with which to pay instalments towards their debts. It will allow debtors to make regular single payments, on the basis of payment programmes devised with the assistance of money advisers, to a central place from where they will be distributed amongst creditors as instalments towards payment of their debts. While participating in the Scheme, debtors will not be subject to enforcement or sequestration action.

One of the principal methods of debt enforcement in Scotland is the Earnings Arrestment or, in the case of multiple debts, Conjoined Arrestment Orders. These are similar in concept to Attachment of Earnings Orders in the rest of the UK, whereby payments are deducted from the debtor's earnings by the employer. The intention of the Debt Arrangement Scheme is to put debt management before debt enforcement, thereby reducing the number of arrestments that have to be made.

The three methods that are currently set out in the draft Regulations by which debtors may make their payments under a payment programme are

• a payment mandate to an employer,
  
  
• direct debit or standing order, or
  
  
• smart card, swipe card, smart key or other type of payment card or key,

although the scheme administrator may approve another type of payment method if it makes successful completion of a programme more likely.

The payment mandate to an employer is likely to be the most common way for payments to be made under a payment programme. The debtor can optionally choose for the regular payment from wages to include other ongoing liabilities, such as rent, utilities and council tax, in addition to the outstanding debts.

The employee (i.e. the debtor) serves the mandate by giving the employer a completed "form 6". The deduction amount shown on the form is the amount that the debtor, the money advisor and the creditors have agreed is the amount that the employee can afford to pay on each payday, and the total amount that must be paid before deductions cease. The form gives details of the name and address of the money advisor and the name and address of the payment distributor, to whom the deductions from pay will be sent for distribution to the creditors.

The employer must then deduct the specified amount on each payday. There is no definition of "arrestable earnings" as there is for Earnings Arrestments. The instruction is simply to take the set deduction each payday. There is also no guidance at present on what to deduct if

• the employee receives two or three weeks' wages at one time,
  
  
• the employee has insufficient earnings to make the full deduction, or
  
  
• the employee is already having payments deducted under a Scottish court order.

Employers may charge a 50p fee for each deduction, the same amount that may be deducted in Scotland for Earnings Arrestments.

The employer must continue to make the deductions on each payday until the total debt has been recovered, or the money advisor revokes the instruction or indicates that payment is complete, or the debtor recalls the instruction in order to continue making the payments in some other way.

The employer must send the amount of each deduction to the payment distributor as soon as it is reasonably practical to do so. There is no provision for saving up weekly payments and making them monthly; the amount deducted must be paid over after each payday. If the employer fails without good cause to make a payment due under an instruction, the employer becomes personally liable for that payment without being able to recover the amount from the employee.

There is nothing in the Act or Regulations that covers the situation where a debtor under Scottish law has an employer that is not subject to Scottish law. It must be assumed that a debtor can only serve a payment mandate on an employer that is subject to Scottish law.

The Debt Arrangement Scheme is expected to some into force later in 2004.

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Source:
www.hmso.gov.uk/legislation/scotland/ssi2004/draft/20042640.htm