Housing Benefit and Council Tax Benefit overpayments guide · 2016-11-23 · 7.44 Section 75,...

Housing Benefit and Council Tax Benefit overpayments guide

The Housing Benefit and Council Tax Benefit overpayments guide has been archived.

The new Housing Benefit overpayments guide is at:

https://www.gov.uk/government/publications/housing-benefit-overpayments-guide

https://www.gov.uk/government/publications/housing-benefit-overpayments-guide

HB/CTB Overpayments Guide

Amdt3 September2010

Courts and civil proceedings

Contents


Timelimitsforrecoveringoverpayments...................................................................7.00

EnglandandWales..................................................................................................7.00

Scotland.....................................................................................................................7.10

Courtproceedings........................................................................................................7.40

Recoveryofcosts/expenses......................................................................................7.45

EnglandandWales..................................................................................................7.50

Whathappensnext?...........................................................................................7.70

Appeals................................................................................................................7.80

Methodsofenforcement..................................................................................7.100

Scotland..................................................................................................................7.140

Methodsofdilligence.......................................................................................7.150

Insolvency....................................................................................................................7.166

SecretaryofState’srighttorecover.....................................................................7.170

Fraudulentoverpayments......................................................................................7.175

Typesofinsolvency................................................................................................7.180

Bankruptcy.........................................................................................................7.181

Sequestration....................................................................................................7.190

TrustDeed..........................................................................................................7.197

Bankruptcy,Sequestration,TrustDeed-recoveryprocessflowchart.............7.203

AdministrationOrder.........................................................................................7.204

IndividualVoluntaryArrangement...................................................................7.209

DebtArrangementScheme...............................................................................7.217

AdministrationOrder(AO),IndividualVoluntaryArrangement(IVA),DebtArrangementScheme(DAS)-recoveryprocessflowchart.....................7.227

DebtReliefOrder...............................................................................................7.228

DebtReliefOrder(DRO)-recoveryprocessflowchart....................................7.260

Compensationorders(EnglandandWales)...............................................................7.261

Information-courts............................................................................................. AnnexA

FormN322A(CountyCourtform)........................................................................AnnexB


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7.00-7.09


Time limits for recovering overpayments

England and Wales

7.00 InEnglandandWales,therearenotimelimitsforrecoveringoverpaidHBandexcessCTB,exceptwhencourtactionisrequired.

7.01 Onceanoverpaymentdebt is createdbetweenan LAand theperson it isrecoverablefrom,anLAinEnglandorWalesmaychoosetopursuethedebtintheCountyCourt.However,suchactionmustbebroughtwithinsixyears,asperTheLimitationAct1980(s9).

7.02 ThetimelimitisapplicablefromthedatethedecisionwasmadebytheLA.Foroverpaymentscausedbyamistakeorerror,includingfraudulentoverpayments,thetimelimitisapplicablefromthedatethemistakeorerrorwasdiscoveredbytheLA.ThisappliestobothoverpaidHBandexcessCTB.

7.03 It shouldalsobenotedthatthetime limit startsagainwhenthere is laterrelevantacknowledgementbythedebtorofthatdebt.Anexamplemaybeintheformofapaymentmadeagainstthedebt,oraletterfromthedebtoradmittingthedebt,suchasenquiringabouttheamountoutstanding.

7.04 TheLimitationAct1980does notapplytorecoveryotherthanbybringinganactioninthecourts.

7.05 ItisimportanttorememberthatinEnglandandWales,overpaymentsbeingrecoveredusingmethodsotherthancourtaction,canberecoveredatanytimeregardlessofhowoldtheyare.However,incaseswhentheoverpaymentcoversalongperiodoftime,LAsmayfinditdifficulttoobtaintheinformationandevidencetomakeandsupporttheircalculationsandthereforetheymaybeunableto‘prove’theoverpaymentexisted.Thesamemayapplyto‘old’overpaymentsthathavebeenleftforsometime(unabletoberecovered),astheinformationandevidencethatsupportedtheircalculationmaynolongerbeavailable.

7.06–7.09


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7.10-7.41

Scotland

7.10 InScotland,anyobligationtorepayoverpaidHBandexcessCTBisextinguished(andthereforemustbewrittenoff)20yearsafterthedatetheoverpaymentdecisionwasmadebytheLA,asperThePrescriptionandLimitation(Scotland)Act1973(s7),if

• therehasbeenno‘relevantclaim’madeagainstthedebt(egtheLAhasnotbroughtanyactioninthecourtstorecovertheoverpaidbenefit,suchaspursuingamethodofdiligenceorinitiating/claiminginsequestrationproceedings),or

• therehasbeennoacknowledgmentofthedebt(egtheLAhasreceivedpartpaymentofthedebtorawrittenadmissionofthedebtfromthedebtor.Partpaymentofthedebtcouldincludeadeductiontakenfrombenefitspayabletothedebtor)

7.11 The20yeartimelimitstartsagain,asperThePrescriptionandLimitation(Scotland)Act1973(s7),when

• theLAbringsactioninthecourtstorecovertheoverpaidbenefit(egpursuinganymethodofdiligenceorinitiating/claiminginsequestrationproceedings),or

• thedebtoracknowledgesthedebt(egmakesapartpaymentofthedebt,suchasadeductionfrombenefits,orawrittenadmissionofthedebt)

7.12 ThePrescriptionandLimitation(Scotland)Act1973isdifferenttoTheLimitationAct1980(whichappliesinEnglandandWales),asTheLimitationActjustlimitstheperiodwithinwhichcourtactioncanbetaken.Section7ofThePrescriptionandLimitation(Scotland)Act1973(extinctionofobligationsbyprescriptiveperiodsoftwentyyears)appliesthe20yearperiodtoobligationstorepaydebts,includingrepayingoverpaidbenefitsundersections75and76oftheSocialSecurityAdministrationAct1992.

7.13 InScotland,thismeansthatoverpaidHBandexcessCTBcannotberecoveredbyanyrecoverymethods,includingactionintheSheriffCourtorCourtofSessioninScotland,ordeductionsfromongoingbenefitentitlement,afterthe20yearperiodhasexpired.

7.14–7.39

Court procedures7.40 Beforepursuingrecoveryviathecourts,anLAshould

• allowtheappeal-rights’periodtoexpire(atleastonemonth),and

• allowanyoutstandingappealtobefullydetermined

7.41 Goodpracticewouldbe to issueat least two letters requesting repayment.AnLA shouldconsideraninterviewandthecosteffectivenessofahomevisit.


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7.42 FurthergoodpracticeistoensurethatproceduresareinplacetocheckthattheclaimantisreceivingalltheHB/CTBandanyotherbenefitsthattheymaybeentitledto(withtheaimofreducingtheoverpaymentorrecoveringtheoverpaymentfromtheirbenefitentitlement).

7.43 Legalproceedingsshouldonlybeconsideredafterattemptstoachieverecoverybyothermeanshavefailed(seeRecovery of overpaymentsearlierinthisguide)andthereisgoodreasontobelievethedebtorcanaffordtomakerepayments.

7.44 Section75,Subsection7oftheSSAA1992providesthatHBoverpaymentsnotrecoveredbydeductionsfromprescribedbenefitsmayberecoveredbyexecutionin

• theCountyCourtinEnglandandWales,asifunderacourtorder,and

• Scotlandasifitwereanextractregistereddecreearbitral

Recovery of court costs/expenses

7.45 Courtcosts(orinScotland,expenses)cannotberecoveredfromongoingHBorbytransferringthemtoaCTaccount.Recoveryofthesecostsmustbesoughtbyanalternativemethod,suchasbyinvoice.

7.46–7.49

England and Wales

7.50 Section75(7)oftheSSAA1992statesthat

‘...where an amount recoverable under this section is to be recovered otherwise than by deduction from prescribed benefit ... if the person from whom it is recoverable resides in England and Wales and the county court so orders, it is recoverable by execution issued from the county court or otherwise as if it were payable under an order of that court.’

7.51 AnHBoverpaymentdecisioncanberegisteredasajudgmentofthecourt.ThisallowstheLAtouseanyofthecourt’senforcementproceduresforrecoveryshouldthedebtornotpay.

7.52 FormN322A(CountyCourtform)shouldbeused,seeAnnex B*laterinthissection,orvisitthecourtwebsiteforadownloadablecopy–http://www.hmcourts-service.gov.uk/HMCSCourtFinder/FormFinder.do

*Note:AnnexBdoesnothaveaheader/footeronthepage,soyoucanphotocopytheformforuse.

7.42-7.52

http://www.hmcourts-service.gov.uk/HMCSCourtFinder/FormFinder.do


http://www.dwp.gov.uk/docs/hbopg-rec-op.pdf


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7.53 ThereareguidancenotesoncompletingN322Aonthecourtwebsite,butthefollowingmaybeuseful

• TheLAisapplyingtoenforceadecision.Thedatethatshouldbeusedisthedatetheoriginaloverpaymentdecisionwasmade.

• TheLAisnotrequiredtocompletetheboxheaded‘WhatisthenameoftheTribunal/courtthatgrantedyouraward’.

• TheLAisnotrequiredtocompletetheboxheaded‘Givethereferencenumberofyourdecision’.

• Intheboxheaded‘Pleasegivedetailsofthe legislationthatallowsyoutoenforcethisdecision’theLAshouldquoteSection75(7)oftheSocialSecurityAdministrationAct1992.

• TheLAisnotrequiredtocompletesections4and5.

• TheLAcandecidewhichofficersignsN322A,asitisnotprescribed.ThiscouldbeamemberoftheOverpaymentsteam.

7.54 Youshouldsendthecompleteddocumenttothecourttogetherwith

• acertificateconfirmingtheamountremainingisduetobepaid,thiscouldbeaninvoiceorletter,and

• theoverpaymentdecisionnotice*,aduplicateisacceptable,and

• theappropriatefee

*Note:Thedecisionnoticeisacopyofthelettertothepersonorpersonswhotheoverpaymentislegallyrecoverablefrom,tellingthemthattherehasbeenarecoverableoverpayment.ThisdecisionnoticemustfullycomplywithSchedule9oftheHBRegs2006/((SPC)Sch8).SeeDecision noticesearlierinthisguide.

7.55 Itisimportanttorememberthattheapplicationisusuallyfiledinthecourtforthedistrictinwhichthepersonfromwhomthedebtisrecoverableresides,iethecourtcoveringthedebtor.Detailsoftheappropriatecourtforthedebtor’scurrentresidencecanbefoundathttp://www.hmcourts-service.gov.uk/HMCSCourtFinder/

7.56 TheLA’slocalcourtshouldbecontactedwhenadviceisrequiredforcompletionoftheirforms,andiftherearequeriesonanypartofthecourt’sprocedure.

7.57-7.69

7.53-7.69

http://www.hmcourts-service.gov.uk/HMCSCourtFinder/

http://www.hmcourts-service.gov.uk/HMCSCourtFinder/

http://www.dwp.gov.uk/docs/hbopg-decision.pdf

http://www.dwp.gov.uk/docs/hbopg-decision.pdf


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What happens next?

7.70 AnofficerofthecourtwillmakeadecisionwhethertograntanorderandtheywillinformtheLAofthedecision.Shouldanorderbegranted,acopywillbesenttoboththeLAandthedebtor.Thisordercanthenbeenforced(seeMethods of enforcementlaterinthissection)asifitwereaCountyCourtjudgment.

7.71 If,however,theCountyCourtdoesnotgrantsuchanordertheLAwillhavetorevisitthedebtagainanddecidetheirnextaction.TheLAshouldconsiderifthedebtshouldbewrittenoff.

7.72-7.79

Appeals

7.80 AnyappealagainstthedecisionmustbemadeaccordingtothereviewproceduresandnottotheCountyCourt.Thecourtwillnotacceptadisputeregardingthefactthatthereisarecoverableoverpaymentorfromwhomitshouldberecovered.Thisisamatterthatcanonlybetakenupbyapplyingforarevisionorbyappealing.TheLAshouldhaveallowedonemonthforappealrightsandsodisputesshouldhavebeenraisedbeforepursuingthedebtincourt.

7.81 IfanoverpaymentdecisionnoticeisdefectiveortheappealrightshavebeenignoredbytheLA,thenanapplicationcanbemadetothecourtforthemtosetasidetheorder.

7.82-7.99

Methods of enforcement

7.100 AnLAshouldweighuptheprosandconsofspendingfurthermoneyonenforcementthatmaynotbesuccessful.TheLAshouldconsiderthefollowing

• aretheylikelytogettheirmoneyandcourtfeefromthedebtor?

• doesthedebtoroweotherpeoplemoneyorhaveothercountycourtjudgments?

• doesthedebtorownanygoodsorassetswhichcanbetakenandsoldatauction?

• isthedebtorworking?

• doesthedebtorhaveotherearnings,suchasincomefrominvestments?

• doesthedebtorhaveabank,buildingsocietyorotheraccount?

• doesthedebtorownproperty?

• doesanyoneelseowethedebtormoney?

TheLAshouldchoosethemethodthatismostlikelytogetthemoneyback.

7.70-7.100


September2010 Amdt3


7.101 Fulldetailsofmethodsofenforcementandadviceareavailable fromtheCourt’swebsite,http://www.hmcourts-service.gov.uk.DetailsofwhichformstouseandleafletscontainingfullinformationarecontainedinAnnex Aattheendofthissection.LAsmayalsoseekadvicefromtheirlegaldepartment.

7.102 Warrant of execution–thisgivescourtbailiffstheauthoritytotakegoodsfromthedebtor’shomeorbusiness.Bailiffswilltrytoeither

• collectthemoneytheLAisowed,or

• takegoodstosellatauctionandthenpassthemoneyontotheLA

7.103 Beforethecourtcanissuethewarrant,thedebtormusthave

• failedtopaytheamounttheyhavebeenorderedtopay,or

• fallenbehindwithatleastoneoftheirpayments

7.104 Itisimportanttorememberthatabailiffcannotalwaysremoveandsellthedebtor’sgoods.Forexample,theycannotremoveessentialhouseholditemsandtradesman’sgoods,orgoodssubjecttohirepurchaseorrentalagreements.Theyalsocannotremoveany itemthathasalreadybeenseizedbybailiffsactingunderanotherwarrant.Thebailiffswilldeductthecostsoftakinggoodsandsellingthematauction.

7.105 Thecountycourtbailiffcanonlyenforceawarrantofexecutionfordebtsupto£5,000.ForanyotheramounttheordershouldbetransferredtotheHighCourt,althoughtheHighCourtenforcementchargescanrunupquitequickly.Anenforcementofficerwillthenenforcetheorder.

Note:Theenforcementofficercannotrecoveranydebtof£600orless.

7.106 Awarrantisvalidforaperiodofoneyear.Oncethisperiodhasexpiredandthewarranthasnotbeenpaid,thenitisnolongervalid.Youcan,however,askthecourtto‘extendthewarrant’slife’,butyouwillhavetopayafurtherfee.

7.107 Furtherguidanceonwarrantofexecutionscanbefoundathttp://www.hmcourts-service.gov.uk/infoabout/enforcement/warrant/index.htm

7.108 Attachment of earnings–thiscanbemadewhenadebtorisemployed.MoneyiscollecteddirectfromtheiremployerandpaidtotheLA.

7.109 Inordertoenforceanattachmentofearnings,thedebtormusthavedefaultedonatleastoneoftheirpaymentsandowemorethan£50andnotbe

• unemployedorself-employed

• afirmoralimitedcompany

• inthearmy,navyorairforce

• amerchantseaman

7.101-7.109

http://www.hmcourts-service.gov.uk

http://www.hmcourts-service.gov.uk/infoabout/enforcement/warrant/index.htm

http://www.hmcourts-service.gov.uk/infoabout/enforcement/warrant/index.htm


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7.110 Ifyouareunsureifthedebtorisemployed,youcanaskforasearchoftheattachmentofearningsindex,whichlistsalltheattachmentofearningsordersagainstpeople.Thereisnofeeforthisservice.Ifthedebtorhasanexistingattachmentofearnings,youmayaskthecourttoconsolidatethedebts.

7.111 Youcanalsoaskforthedebtortobequestioned.Thisiscalledan‘ordertoobtaininformation’,detailsofwhichcanbefoundlaterinthissection.

7.112 Youdonotneedtoknowwhothedebtor’semployeris,inordertoapplyforanattachmentofearnings.Thecourtwillget this informationfromthedebtor.However, if theyarenotemployed,egtheyareunemployedorself-employed,youwillstillhavetopaythecourtfee.

7.113 Thecourtwilltellthedebtortoeitherpaythedebtinfullorcompleteastatementofmeans,whichwillallowacourtofficertodecidehowmuchshouldbetakenandhowoften.

7.114 Anorderissenttothedebtor’semployerthattellsthemtotakeanamountfromthedebtor’searningseachpaydayandsendittoacollectionoffice.ThemoneyisthensenttotheLA.

7.115 SometimesitisenoughtoinformthedebtorthattheLAintendstoapplyforanattachmentofearningsorder.Manydebtorsdonotliketheiremployerstoknowtheyareindebtandsowillmakeavoluntaryarrangementtopay.

7.116 Furtherguidanceonattachmentofearningscanbefoundathttp://www.hmcourts-service.gov.uk/infoabout/enforcement/ae/index.htm

7.117 Third party debt order–thisorderisusuallymadetostopthedefendanttakingmoneyoutoftheirbank/buildingsocietyaccount(themoneytheLAisowedisthenpaidtothemfromtheaccount).Itcanalsobesenttoanyonewhoowesthedebtormoney.

7.118 Anapplicationforathirdpartydebtordercanbemadeatanytimeafteryouhaveregisteredthedebtatcourt,butitwillnotbegrantedunlessthedebtorhaseither

• failedtopaytheamountofthedebtwhenitwasdue,or

• failedtomakeoneormoreagreedpayments

7.119 Youcannotapplyforathirdpartydebtorderagainstajointbankaccountunlessbothpartiesareheldliableforthedebt.

7.120 Whenthecourtorderisreceivedbythebank/buildingsociety,theywillfreezetheaccountimmediately,soonlyfundsthatareintheaccountonthatdaywillbeaffected.LAsshouldthereforeconsidercarefullywhentomaketheapplication.Iftheorderisreceivedthedaybeforethedebtorispaidtheirwages,itispossibletherewillbelittleornofundstobefrozen.

7.121 Furtherguidanceonthirdpartydebtorderscanbefoundathttp://www.hmcourts-service.gov.uk/infoabout/enforcement/thirdparty/index.htm

7.110-7.121

http://www.hmcourts-service.gov.uk/infoabout/enforcement/thirdparty/index.htm

http://www.hmcourts-service.gov.uk/infoabout/enforcement/thirdparty/index.htm


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7.122 Charging order–thisorderpreventsthedebtorfromsellingtheirassets,suchasproperty,investmentsorland,withoutpayingwhatisowedtotheLA.

7.123 Anapplicationforachargingordercanbemadeatanytimeafteryouhaveregisteredthedebtatcourt,butwillnotbegrantedunlessthedebtorhas

• failedtopaytheamountofthedebtwhenitwasdue,or

• failedtomakeoneormoreagreedpayments

7.124 Achargeonapropertymeansthatifthepropertyissold,thechargehastobepaidbeforeanyoftheproceedscanbegiventothedebtor.

Note:Achargingorderdoesnotmeantheclaimantmustselltheirproperty,althoughacreditorcouldrequestthisthroughthecourts.Iftherearealreadychargesonthepropertywhenthechargeisregistered,forexampleamortgage,thenthatchargewillbepaidfirst.

7.125 TheLandRegistrymustalsobemadeawareofafinalchargingorder.

7.126 ItmaybeusefulfortheLAtotakeadvicefromtheirlegaldepartmentiftheyintendtousethismethodofenforcement.

7.127 Furtherguidanceon chargingorders canbe foundathttp://www.hmcourts-service.gov.uk/infoabout/enforcement/charging/index.htm

7.128 Order to obtain information–iftheLAholdslittleornoinformationaboutthedebtortheymayaskthecourtforan‘ordertoobtaininformation’fromthedebtor(sometimesknownasanoralexamination).Thedebtorwillbeorderedtocometothecourttobequestionedonoathbyacourtofficer.Thisisnotamethodofenforcement,butawayoffindingoutdetailsofthedebtor’s

• employmentstatus

• employer,wagesorsalary(ifappropriate)

• additionalincome

• propertyownedwhichmayhaveasaleablevalue(house,car,caravanetc)

• bankorbuildingsocietyaccountsandtheirbalances

• dependantsandoutgoingsfromincome

Note:Youmusthavedetailsofthedebtor’saddressinordertoobtainthisinformation.

7.129 Youcanapplyforanordertoobtaininformationatanytimeafteryouhaveregisteredadebt.Thedebtordoesnothavetobebehindwiththeirpayments.

7.130 TheinformationcollectedfromthisordercanhelptheLAdecide

• whetherthedebtorcanpaythem,and

• whichmethodismostlikelytobesuccessful

7.122-7.130


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7.131 Afeeispayableforthisaction,butthecourtmayaddthisfeetothemoneythedebtoralreadyowestheLA.

7.132 Furtherguidanceonorderstoobtaininformationcanbefoundathttp://www.hmcourts-service.gov.uk/infoabout/enforcement/information/index.htm

7.133 Bankruptcy order–acreditormayapplyforabankruptcyorderifthedebtorowes£750ormoreandanarrangementtopayhasnotbeenagreed.

7.134 Beforepresentingabankruptcypetitioneither

• adebtormusthavefailedtocomplywitha‘statutorydemand’,whichisapre-courtformthatrequiresthedebtor,within21days,to

– paythedemandedamount

– offertosecurethedebtagainstanypropertyowned

– makeanarrangementtopaythedebtthatissatisfactorytothecreditors,or

• abailiffmustnothavebeenabletoseizesufficientgoodstocovertherequiredamount

7.135 Furtherguidanceonbankruptcyorderscanbefoundathttp://www.insolvency.gov.uk/

7.136-7.139

Scotland

7.140 TheSocialSecurityAdministrationAct1992(Section75(7)(b))statesthat

‘...where an amount recoverable under this section is to be recovered otherwise than by deduction from prescribed benefits…. If he resides in Scotland, it may be enforced in the same manner as an extract registered decree arbitral bearing a warrant for execution issued by the sheriff court of any sheriffdom in Scotland. ‘

7.141 ThispermitsanLAtotakemeasurestoenforce,inScotland,adecisionthatasumofHBhasbeenoverpaidwithoutfirsthavingtoobtainacourtdecree.

7.142 TheprovisionsgofurtherthantheequivalentprovisionsrelatingtoEnglandandWales(Section75(7)(a)),whereadecisionthattherehasbeenanoverpaymenthastoberegisteredwiththeCountyCourtbeforeanordercanbegranted.Section75(7)(b)allowsanoverpaymentdecisiontobeenforcedinthesamemannerasifitwereacourtdecree,withoutapplyingtoregistertheoverpaymentdecisionwiththesheriffcourt.

7.143 Theoverpaymentdecisionwillbeimmediatelyenforceablebyvariousmethodsofdiligence.DiligenceistheScottishtermformethodsofenforcingtherepaymentofdebts.

7.144-7.149

7.131-7.149

http://www.hmcourts-service.gov.uk/infoabout/enforcement/information/index.htm

http://www.hmcourts-service.gov.uk/infoabout/enforcement/information/index.htm

http://www.insolvency.gov.uk/


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Methods of diligence

7.150 AnLAshouldweighuptheprosandconsofspendingfurthermoneyondiligencethatmaynotbesuccessful.TheLAshouldconsiderthefollowing

• aretheylikelytogettheirmoneyandcourtfeefromthedebtor?

• doesthedebtoroweotherpeoplemoneyorhaveothercountycourtjudgments?

• doesthedebtorownanygoodsorassetswhichcanbetakenandsoldatauction?

• isthedebtorworking?

• doesthedebtorhaveotherearnings,suchasincomefrominvestments?

• doesthedebtorhaveabank,buildingsocietyorotheraccount?

• doesthedebtorownproperty?

• doesanyoneelseowethedebtormoney?

TheLAshouldchoosethemethodthatismostlikelytogetthemoneyback.

7.151 Formoreinformationortodownloadformsvisitthe

• Scottishcourtswebsitehttp://www.scotcourts.gov.uk,or

• AccountantinBankruptcy(Scotland’sInsolvencyService)website http://www.aib.gov.uk/MainNav/Services/diligence

7.152 Charge for payment–thisisaformaldemandforpaymentofthedebtwithinafixedperiod(usually14days)warningthatfurtheractionwillbetakenunlessthedebtorrepaysthedebtwithinthespecifiedperiod.

7.153 Attachment–thisisadiligencewhichinvolvestheattachment,removalandauctionofcertaingoodswhicharenotkeptwithinahome.Therearelimitationsonwhattypesofgoodscanbeattached.Itisnotpossible,forexample,toattachthetoolsofthedebtor’strade.

7.154 Attachmentisexecutedonbehalfofthecreditorbysheriffofficersandmayonlybeusedafterachargeforpaymentisservedonthedebtorandthespecifiedperiodhasexpiredwithoutpaymenthavingbeenmade.ThesheriffofficerwillvaluethearticlestobeattachedandmakeareporttotheSheriff.Thedebtorhastherighttobuybackarticleswhichhavebeenattached,atthevaluewhichhasbeenplacedonthearticlebythesheriffofficer,within14daysofthedateonwhichthearticlewasattached.Afterthereporthasbeenreceived,theSheriffOfficermayremoveandarrangeforthesaleoftheattachedarticlesatauction.Themoneyraisedisthenhandedovertothecreditor.

7.150-7.154

http://www.scotcourts.gov.uk

http://www.scotcourts.gov.uk


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7.155 Exceptional attachment – it is possible to attach goods from within the debtor’s home ifanexceptionalattachmentorder isobtainedfromtheSheriff.ASheriffwillonlygrantanexceptional attachment order if a creditor can show that they have tried to negotiate asettlement of the debt; the creditor has already tried to recover the debt by arrestment/earningsarrestmentandtheyhavefailed;thereisareasonableprospectthatexecutionofanexceptionalattachmentwouldleadtorecoveryofsufficientmoneytocovertheexpensesoftheattachmentanditwouldbereasonableinthecircumstancestogranttheexceptionalattachmentorder.

7.156 Anexceptionalattachmentorderpermitstheattachment,removalandauctionofnon-essentialitemsfromwithinthehome.Whenthegoodsaresoldatauctiontheproceedsarehandedovertothecreditor.

7.157 Earnings arrestment–thiscanbeusedwhenadebtorisemployed.MoneyiscollecteddirectlyfromtheemployerandpaidtotheLA.

7.158 Theearningsarrestmentissentdirectlytothedebtor’semployer,orderingthemtodeductasumfromthedebtor’swageseachpayday.Theamounttobedeductediscalculatedusingfixedtables.Therearelimitsonhowmuchcanbededucted,dependingonwhenandhowmuchthedebtorispaid.Theemployerwillcontinuetomakedeductionsuntilallofthemoneythedebtorowesisrepaid.Anemployercanchargethedebtorafeeformakingtherepayments.

7.159 Arrestment–thiscanbeusedtofreezemoneyorgoodswhichbelongtothedebtor,butwhichareinthehandsofathirdparty,forexampleabankorbuildingsociety.Forexample,ifanarrestmentisservedonthedebtor’sbankanyfundsheldinthedebtor’saccountarefrozen.Thedebtorcannotwithdrawanymoneyoruseittopayanystandingordersordirectdebits.Jointaccountscanbeincludedinthearrestment.

7.160 Funds which are arrested are automatically released to the creditor 14 weeks after thearrestment, if no objection is lodged. Alternatively, where the debtor signs a mandate(instruction)authorizingthethirdpartytodoso,thethirdpartymayreleasethesumsarrestedbeforetheexpiryofthatperiod.Ifthedebtorobjectstotheautomaticreleaseoffunds,thecourtwillfixahearingtodeterminetheobjection.

7.161 Money attachment – in certain circumstances it ispossible fora creditor toattachmoney(includingcashorcheques)whichbelongstothedebtor,ifachargeforpaymenthasbeenservedandthespecifiedperiodhasexpiredwithoutpaymenthavingbeenmade.Creditorsarenotallowedtousemoneyattachmentifarrestmentisavailabletothemanditcannotbeimplementedinsomeone’shome.Aswithotherformsofattachment,moneyattachmentiscarriedoutonbehalfofthecreditorbysheriffofficers.Thesheriffofficerswillremoveanymoneywhichisfound(uptothevalueofthedebtincludinginterestandexpenses)andwilldeposititinabankaccount.Thesheriffofficerswillthenserveadocumentonthedebtorprovidingdetailsofthemoneywhichhasbeenattachedandreporttothesheriffonthis.Inordertoaccessthemoneywhichhasbeenattached,thecreditormustmakeanapplicationtothesheriffwithin14daysofthereportbeingmade.

7.155-7.161


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7.162 Inhibition–thispreventsthedebtorfromsellingtheirhome(orotherproperty)oranylandtheyown,orsecuringfurthercreditagainstit.Itdoesnotgivethecreditortherighttotakepossessionof,ortoforcethedebtortoselltheirproperty.

7.163 Sequestration–thisistheScottishtermforbankruptcy.IfacreditorpetitionstheSheriffforbankruptcy,adebtorcouldbemadebankruptinlessthan14daysfromthedateofthepetition.Thedebtorreceivesacitationnotifyingthemofthepetitionandthehearingwhichhasbeenfixedtodealwiththeapplicationforsequestration.

7.164 Adebtordoesnothavetoattendcourt,unlesstheyintendtopersuadethecourtthattheyshouldnotbesequestrated.Asolicitorcouldattendonthedebtor’sbehalf.Sequestrationisnormallygrantedunlessthedebtorcanproduceevidencethattheyhavesettledthedebt,cashorabanker’sdraftinsettlementofthedebt,orsufficientsecurityforthedebt.

7.165 Ifgranted,thesequestrationcommencesfromthedatethecourtissuesthewarranttociteandthisisreferredtoasthedateofsequestration.

Insolvency7.166 Insolvencyistheinabilityofanindividual(orcompany)topaydebts.Wheretheirsituationis

suchthatformalactionisnecessary,thereareseveraloptionsopentothemortheircreditors

• Bankruptcy(EnglandandWales)

• Sequestration(Scotland)

• TrustDeed(Scotland)

• AdministrationOrder(EnglandandWales)

• IndividualVoluntaryArrangement(IVA)(EnglandandWales)

• DebtArrangementScheme(DAS)(Scotland)

• DebtReliefOrder(DRO)(EnglandandWales)

7.167-7.169

Secretary of State’s right to recover

7.170 ThereisnothinginthelegislationorcaselawwhichpreventsanLAfrommakingdeductionstorecoveranoverpaymentduringaperiodofinsolvency.

7.171 The relevantHBprovisionswhichallow for themakingofdeductions from the claimant’sbenefitprovidesfordeductionsatsourceandnota‘clawback’(R v Secretary of State for Social Security Exparte Taylor and Chapman and Mulvey v Secretary of State for Social Security).Inotherwords,thedebtorhasnorighttoreceivebywayofbenefitmorethanthenetamountandatnotimedoesthedeductionbecomethepropertyofthedebtor.However,thecasescitedwillnotapplywhenthepersoncomesoffbenefit,giventhattheeffectofinsolvencyistopreventanLA,ascreditor,fromtakinganyactiontoenforceitsdebts.

7.162-7.171


Amdt3 September2010


7.172 LAs shouldalways take intoaccounta claimant’shealthandfinancial circumstanceswhendeciding whether to commence deductions and the level of deduction, to avoid causingunduehardshiptotheclaimantortheirdependants.Itmustberememberedthatadebtor,bydefinition,whoisinvolvedininsolvencyhasverylittlesurplusincome.

7.173 Oncebankruptcy,sequestrationortrustdeedactionhascommencedanLAcanonlyrecoveranoverpaymentthatwasdecidedpriortotheorderbeinggranted,bymakingdeductionsfromongoingHBorprescribedDWPbenefits.Thisalsoappliestooverpaymentsthathavebeenincludedinanadministrationorder, IVA,DASorDRO.Noothermethodsofrecoverycanbeutilisedduringtheperiodofinsolvency.LAsshouldbecarefulnotto‘overrecover’anoverpaymentiftheyarereceivingpaymentsthroughthetermsoftheinsolvency,alongsiderecoveryfromongoingentitlement.

7.174 Overpaymentsthathavenotbeenincluded,forwhateverreason,inanadministrationorder,IVA(atanypointduringtheIVA),DASorDROarenotaffectedbytheinsolvencyorderandthereforecanberecoveredbyanyrecoverymethods.Theydonothavetobewrittenoffwhentheadministrationorder,IVA,DASorDROisdischarged.

Fraudulent overpayments

7.175 Fraudulent overpayments that were decided prior to bankruptcy, sequestration or a trustdeedcancontinuetoberecoveredafterthebankruptcy,sequestrationortrustdeedhasbeendischarged.Anyrecoverymethodscanbeutilisedafterdischarge.

Discharge does not release the bankrupt from any bankruptcy debt which he incurred in respect of, or forbearance in respect of which was secured by means of, any fraud or fraudulent breach of trust to which he was a party.

Insolvency Act 1986 Section 281(3)

(2) The debtor shall not be discharged by virtue of subsection (1) above from-

(c) any liability incurred by reason of fraud or breach of trust;Bankruptcy (Scotland) Act 1985 Section 55(2)(c)

(2) A letter of discharge does not discharge the debtor from any liability arising after the date on which the trust deed was granted or any debt which would be excluded from a discharge under section 55(2) of the Act, nor does it affect the rights of secured creditors.

Protected Trust Deeds (Scotland) Regulations 2008 Regulation 19(2)

7.176 FraudulentoverpaymentsthatwereincludedinaDROcancontinuetoberecoveredaftertheDROhasbeendischarged.Anyrecoverymethodscanbeutilisedafterdischarge.

Subsection (1) does not apply in relation to any qualifying debt which the debtor incurred in respect of any fraud or fraudulent breach of trust to which the debtor was a party.

Insolvency Act 1986 Section 251I(3)

7.272-7.176


September2010 Amdt3


7.177 Theword‘fraud’insection281oftheInsolvencyAct1986,isnotdefinedinthelegislation.However,intheHighCourtjudgmentofMander v Evans(3AllER811[2001]),‘fraud’,withinthecontextofsection281,washeldtomean‘actualfraud’anddidnotincludeconstructivefraud‘suchasundueinfluence’.Itwasemphasisedthatthewordhastobegivenitsnaturalmeaning.Itfollowsthattheremustbeclearevidenceofdishonestyinaparticularcaseinordertoclassifyanactas‘fraud’.

7.178 ForHB/CTBpurposes‘fraudulentoverpayment’meansanoverpayment,inrespectofaperiodfalling wholly or partly after 31st March 1993, where the claimant has in respect of theoverpayment

(a)beenfoundguiltyofanoffencewhetherunderastatuteorotherwise;

(b)madeanadmissionaftercautionofdeceptionorfraudforthepurposeofobtainingrelevantbenefit;or

(c)agreedtopayapenaltyundersection115AoftheSSAA1992(penaltyasanalternativetoprosecution)andhasnotwithdrawnthatagreement.

Inparagraph(b)‘admissionaftercaution’means

(a)inEnglandandWales,anadmissionafteracautionhasbeenadministeredinaccordancewithaCodeissuedunderthePoliceandCriminalEvidenceAct1984;

(b)inScotland,anadmissionafteracautionhasbeenadministered,suchadmissionbeingdulywitnessedbytwopersons.

7.179 OverpaymentsclassifiedasFraudthatareincludedinanadministrationorder,IVAorDAS,whicharestilloutstandingondischarge,cannotcontinuetoberecovered.Theymustbewrittenoffondischarge.

Types of insolvency

7.180 Formoreinformationaboutthedifferenttypesofinsolvencypleasereferto

• TheInsolvencyServicewebsiteathttp://www.insolvency.gov.uk/,or

• theAccountantinBankruptcy(Scotland’sInsolvencyService)website http://www.aib.gov.uk/MainNav/Services/

Bankruptcy

7.181 Acourtmakesabankruptcyorderafterabankruptcypetitionhasbeenpresented.Itisusuallypresentedbyeitherthedebtororoneormoreofthecreditorswhoareowedatleast£750bythedebtor.Thebankruptcyprocesscaneitherbevoluntaryorinvoluntaryandtheordercanstillbemadeifthedebtordoesnotagreetoit.Thedebtormustoweatleast£750.

7.177-7.181

http://www.aib.gov.uk/MainNav/Services/


Amdt3 September2010


7.182 Theofficialreceiverhasresponsibilityforadministeringthebankruptcyandprotectingthedebtor’sassetsfromthedateofthebankruptcyorder.Theywillalsoactasthetrusteeunlessaninsolvencypractitionerisappointed.Thetrusteetakesovertheassets,disposesofthem,thensharesoutanyproceeds(afterexpenses)tothecreditors.

7.183 Inmost cases,whenaperson ismadebankruptafter1April 2004 thebankruptcywillbedischargedafteroneyear.Howeverthisperiodcanbeshorter,forexampleifthecourtannulsthebankruptcy.Ifhoweverthedebtordoesnotcarryouttheirdutiesunderthebankruptcyproceedings,theofficialreceiverortrusteecanapplytohavethedischargepostponed.

7.184 Discharge from bankruptcy will release the debtor from all debts that pre-dated thebankruptcyorder.Howevertherearesomeexceptions,suchasdebtsarisingfromfraud(Fraudoverpayments),certaincrimesandfines,anddebtsincurredafterthebankruptcyorderwasmade(overpaymentdecisionsthatweremadeafterthedateofthebankruptcyorder).Theseexceptionscancontinuetoberecoveredafterdischargeandanyrecoverymethodscanbeutilised.

7.185 Overpaymentsthatweredecidedpriortothebankruptcyordercanonlyberecoveredduringtheperiodofthebankruptcyorder,bymakingdeductionsfromongoingHBorprescribedbenefitsandonlyuptothedateofdischarge.Anyamountsoutstandingmustbewrittenoffondischarge(excludingFraudoverpayments).PleaseseeBankruptcy/Sequestration/Trust Deed flowchart,laterinthissection.

7.186-7.189

Sequestration

7.190 ThisistheScottishequivalentofbankruptcy.Therearetwomethodsofsequestratingadebtor;bydebtorapplicationtotheAccountantinBankruptcyorbypetitiontotheSheriffCourt.Apetitionforthesequestrationofadebtormaybebrought(amongstothers)byoneormorequalifiedcreditors.Thesequestrationisadministeredbyatrustee,whocouldbetheAccountantinBankruptcyoraninsolvencypractitioner.

7.191 Sequestrationinvolvesthetransferofthedebtor’sassetsandpropertytothetrusteeforthebenefitofthecreditors.Thetrusteehasadutytoselltheassets/property.Thetrusteemayalsoseekavoluntarycontributionfromthedebtor’sincome,ifinregularemployment.

7.192 Ifadebtorappliesfortheirownsequestration,theywillnormallybedischargedoneyearafterthedatetheorderwasawarded.Ifacreditorpetitionedforthesequestration,dischargewillbeoneyearafterthedatethatthecourtissuedthewarrantcitingthedebtortoappearatahearing.Ifadebtordoesnotco-operatewiththetrustee,thetrusteecanaskthesherifftodelaythedischargebyuptotwoyearsatatime.

7.193 ‘LowIncomeLowAsset’isarouteintosequestrationfordebtorswhohavelowincomeandlowassets.Theymustapplyforit,likeanyothersequestration,totheAccountantinBankruptcyandpaya£100fee.

7.182-7.193


September2010 Amdt3


7.194 Lowincomemeansagrossweeklyincomeofnomorethanthestandardnationalminimumwageforafortyhourworkingweek.However,whencalculatingthedebtor’sincomenoaccountwillbetakenofsocialsecuritybenefitsortaxcredits,althoughtheymaybetakenintoaccountwhenconsideringwhetherthedebtorshouldpayacontributionduringthesequestration.Lowassetsmeansthatthedebtorhasnosingleassetworthmorethan£1,000andtotalassetsworthnomorethan£10,000.Theymustnotownorjointlyownahouse,propertyorland.

7.195 Likebankruptcy,dischargefromsequestrationwillreleasethedebtorfromalldebtsthatpre-datedthedateofsequestration.Howeverthereareexceptions,suchasdebtsarisingfromfraud(Fraudoverpayments),certaincrimesandfines,anddebts incurredafterthedateofsequestration(overpaymentdecisionsthatweremadeafterthedateofsequestration).Theseexceptionscancontinuetoberecoveredafterdischargeandanyrecoverymethodscanbeutilised.

7.196 Overpaymentsthatweredecidedpriortosequestrationcanonlyberecoveredduringtheperiodofinsolvency,bymakingdeductionsfromongoingHBorprescribedbenefitsandonlyuptothedateofdischarge.Anyamountsoutstandingmustbewrittenoffondischarge(excludingFraudoverpayments).PleaseseeBankruptcy/Sequestration/Trust Deed flowchart,laterinthissection.

Trust Deed

7.197 Atrustdeedisavoluntary,butlegallybindingagreementbywhichadebtortransferssomeoralloftheirassetstoatrustee,tobeadministeredforthebenefitofcreditorsandthepaymentofdebts.Thetrusteemustbeaqualifiedinsolvencypractitioner.

7.198 Creditorsareboundbythetermsofthetrustdeed,iftheyhaveagreedtoit.However,ifthetrustdeedbecomesprotected,evenifthecreditorshavenotagreedtoit,theywillbeboundbyit.Anexceptiontothiswouldbeifthecreditorwassuccessfulinapplyingtothesheriffforanorderthattheywillnotbeboundbythetrustee’sdischarge.

7.199 Ifcertainconditionsaremet,atrustdeedwillbecomeprotectedfromthedatethetrustdeedisrecordedintheregisterofinsolvencies,bytheAccountantinBankruptcy.Oneconditionisthatthetrusteemustpublishanotice intheEdinburghGazetteandwritetoallknowncreditorsenclosingcopiesofthenoticeandtrustdeed.Thenoticeadvisesthatthetrustdeedmaybecomeprotected,unlessthemajorityofcreditors,orcreditorsrepresentingatleastonethirdofthedebts,makewrittenobjectionstothetrusteewithinfiveweeks.Furthermore,ifatrustdeedistobecomeprotected,thedebtormusttransfereverythingtheyown,excepthouseholdgoodsandcurrentincome,tothetrustee.

7.200 Thetermsofdischargewillusuallybeincludedinthetrustdeed.Dischargeisnormallythreeyearsafterthedateofgranting.Ifthetrustdeedbecomesprotected,thedischargewillbebindingonallcreditors,includingtheLA(unlessacreditorhassuccessfullyappliedtothesheriffforanorderthatthecreditorwillnotbeboundbythedischarge).Ifthetrustdeeddoesnotbecomeprotected,thedischargewillonlybebindingonthosecreditorsthatagreedtoit.Thosethatdidnotagreetoitwillbeabletopursuethedebtorforrepaymentafterdischarge.

7.194-7.200


Amdt3 September2010


7.201 Forprotectedtrustdeeds,aletterofdischargedoesnotdischargethedebtorfromanyliabilityarisingafterthedateonwhichthetrustdeedwasgrantedoranydebtwhichwouldbeexcludedfromdischargeifthedebtorwassequestrated.Asadebtorcannotbedischarged,followingsequestration,fromanyliability incurredbyreasonoffraudorbreachoftrust,thismeansanLAcancontinuetorecoverfraudulentoverpaymentsafterdischarge,usinganyrecoverymethods.

7.202 Likebankruptcyandsequestration,overpaymentsthatweredecidedpriortothetrustdeedbeinggrantedcanonlyberecoveredduringtheperiodofthetrustdeed,bymakingdeductionsfromongoingHBorprescribedbenefitsandonlyuptothedateofdischarge.Anyamountsoutstanding must be written off on discharge (excluding Fraud overpayments). Please seeBankruptcy/Sequestration/Trust Deed flowchart,laterinthissection.

7.201-7.202


September2010 Amdt3


Bankruptcy, Sequestration, Trust Deed (TD)

- recovery process flowchart

Wastheoverpaymentdecidedpriortothebankruptcy,sequestrationorTDbeingmade?

TheoverpaymentcanonlyberecoveredbymakingdeductionsfromongoingHBorprescribedbenefitsuntilthebankruptcy,

sequestrationorTDisdischarged Theoverpaymentcanbe

recoveredbothduringandafterthebankruptcy,sequestrationorTDisdischarged,usingany

recoverymethods

Istheoverpaymentfraudulent?(AsdefinedintheClassification and

recoverabilitysection,earlierinthisguide)

Anyamountoutstandingmust

bewrittenoffwhenthebankruptcy,

sequestrationorTDisdischarged

Whenthebankruptcy,sequestrationorTDis

discharged,thefraudulentoverpaymentcanberecoveredusinganyrecoverymethods

Yes No

No Yes

▼

▼

▼ ▼

▼

7.203


Amdt3 September2010


Administration Order

7.204 Whenadebtorhasatleasttwodebts,whichtotallessthan£5,000andtheyhaveatleastoneCountyCourtorHighCourtjudgmentagainstthem,theycanapplytotheCountyCourtforanadministrationordertobegranted.ThedebtormusthavearegularincomeandagreetomakeweeklyormonthlypaymentstoCourt,whothendistributethemoneybetweenthecreditorsonapro-ratabasis,accordingtothesizeofeachdebt.

7.205 TheCourtmakescontactwiththecreditorsnamedbythedebtor,andtheyhave16daysinwhichtotelltheCourtofanyobjectionstheyhave,forexampleiftheythinktheofferthedebtorhasmadeistooloworiftheythinktheamountofthedebtquotedbythedebtorisincorrect.IftherearenoobjectionsandtheCourtishappywiththedebtor’sofferofrepayment,theorderwillbemade.

7.206 Unlessthejudgemakesacompositionorderorthedebtorstopsmakingregularrepayments,anadministrationorderwillnormallycontinueuntilthedebtsarefullyrepaid.Detailsoftheadministrationorderwillberecordedoncreditreferencefilesforaperiodofsixyears.IfadebtordefaultsontheirpaymentstotheCourt,theywillreturnthecaseandtheLAcanthenpursuerecoverybyothermeans.

7.207 Onlydebtsthathavebeenincludedintheadministrationorderwillbeaffectedbytheorder.DuringtheperiodoftheadministrationorderoverpaymentscanonlyberecoveredbymakingdeductionsfromongoingHBorprescribedbenefits.However,asoverpaymentsarenormallyfully recovered when included in an administration order, making deductions may not beappropriate.Debtsthathaven’tbeenincludedcanberecoveredbyanyrecoverymethods,bothduringtheperiodoftheadministrationorderandafterithasbeendischarged.

7.208 Unlikebankruptcy,sequestrationandtrustdeeds,overpaymentsthathavebeencausedbyfraudcannotcontinuetoberecoveredoncetheadministrationorderhasbeendischarged.However,asmostadministrationorderscontinueuntilthedebtsarefullyrepaid,thereshouldn’tbeanythingoutstandingtowriteoff.PleaseseeAdministration Order/Individual Voluntary Arrangement/Debt Arrangement Scheme flowchart,laterinthissection.

Individual Voluntary Arrangement

7.209 AnIndividualVoluntaryArrangement(IVA)isaformalagreementbetweenadebtorandtheircreditors,wheretheycometoanarrangementtopayoffapercentageofwhattheyowe.Thisisusuallyoveraperiodoffiveyears.Acreditornormallyreceivesalargerrepaymentthanwouldhavebeenmadeifthedebtorwasmadebankrupt.

7.210 Thedebtorneedsthehelpofaninsolvencypractitionertodraftaformalproposal,whichsetsouthowmuchthedebtorintendstopayeachmonthandthedurationofthearrangement.

7.211 Acreditors’meetingiscalled,thepurposeofwhichistoallowthecreditorstoagreeto,orrejectthedebtor’sproposals.AcceptanceoftheIVArequires75%(inmonetaryvalue)ofthosecreditorswhovoteatthemeeting(eitherinpersonorbyproxy),agreeingtotheproposals.Iftheydoso,allcreditorswillbeboundbytheIVAregardlessofwhethertheyvotedagainstitornot.

7.204-7.211


September2010 Amdt3


7.212 Acreditor that is includedat somepoint in the IVA,but thatwasnotgivennoticeof thecreditors’meetingisstillboundbytheIVA.However, ifondischargethatcreditorhasnotbeenpaidtheamountsagreedintheIVA,theyremainentitledtobepaid.ThismeansifanLAdidn’treceivenoticeofanIVA,theywouldstillbeboundbyit,butiftheydidn’treceiveanypayments,ondischargetheywouldstillbeabletorecovertheamountofdebtthatwouldhavebeenpayableundertheagreement.

Example

TheIVAstatedthatthedebtorwastopaycreditors50pofevery£1.00theywereowed.

IftheLAisnotpaid50%oftheirdebtbythetimetheIVAisdischarged,theywill

• writeoff50%oftheirdebt,whentheIVAisdischarged

• continuetorecovertheremaining50%,usinganyrecoverymethodsafterdischarge

7.213 Acreditor that is includedat somepoint in the IVA,butwasexcludedfromthecreditors’meeting,isentitledtochallengetheIVAbeforethecourt,onthegroundthattheirinterestshavebeenunfairlyprejudiced,egacreditorwhoisowedalargeamountmayarguethatthedebtorcouldhaveaffordedtopaybackahigherpercentageoftheirdebts.Iftheyhadbeengivennoticeofthecreditors’meetingtheymayhavebeenabletoblockthemakingoftheIVA.

7.214 Ifcreditorsagree,thearrangementisendorsedbytheCourtandregistered.Thedebtorthenmakesrepaymentstotheinsolvencypractitioner,whoensuresitisdistributedtoallcreditorsonapro-ratabasis.Onsuccessful completionof the IVA,egeverything is repaid thatwasagreedinthearrangement,thedebtorswillhavetowriteoffanyoftheirdebtsthatarestilloutstanding.

7.215 OnlydebtsthathavebeenincludedatsomepointintheIVAwillbeaffectedbythearrangement.During theperiodof the IVA,overpayments thathavebeen included in the IVA canonlyberecoveredbymakingdeductionsfromongoingHBorprescribedbenefits.Anyamountsoutstandingwillhavetobewrittenoffondischarge.Debtsthathaven’tbeenincluded,eitherattheoutsetofthe IVAoratanypointduringtheIVA,canberecoveredbyanyrecoverymethods,bothduringtheperiodoftheIVAandafterithasbeendischarged.

7.216 Unlikebankruptcy,sequestrationandtrustdeeds,overpaymentsthathavebeenincludedintheIVAthathavebeencausedbyfraudcannotcontinuetoberecoveredoncetheIVAhasbeen discharged. Please see Administration Order/Individual Voluntary Arrangement/Debt Arrangement Scheme flowchart,laterinthissection.

Debt Arrangement Scheme

7.217 TheDebtArrangementScheme(DAS)hasbeenavailableinScotlandsince30November2004.Itwas introducedbytheScottishExecutive inordertoprotectdebtorsfromdiligenceandsequestration.Itisn’tavailableinEnglandorWales,althoughEnglishandWelshLAsmayhavedebtorsresidinginScotlandwhomaybeinvolvedintheDAS.

7.212-7.217


Amdt3 September2010


7.218 TheDASisavailabletodebtorshabituallyresidentinScotland,withtwoormoreoutstandingdebtsandsufficientincomeavailabletomakerepaymentstocreditors.

7.219 TheDASallowsadebtortoapplyfortheirdebtstobepaidunderadebtpaymentprogramme.Suchaprogrammecannotbeappliedforwithoutthedebtorfirsthavingobtainedtheadviceofa‘moneyadviser’(apersonapprovedtoprovidesuchadvice).Creditorsareaskedtoagreetothedebtpaymentprogramme.Thosethatdonotrespondwithin21daysaredeemedtohaveconsentedtotheprogramme.Theagreementallowsthedebtortopayofftheirdebtsoveraperiodoftime.Thedebtpaymentprogrammecanbeforanyamountofmoneyandforanyreasonablelengthoftime.

7.220 TheapplicationisthensenttotheAccountantinBankruptcy,whoistheDASadministrator,forapproval.Whenallcreditorshaveconsentedtothedebtor’sapplication,theAccountantinBankruptcywillapprovetheprogramme,althoughhemaymakehisapprovalsubjecttoconditions.Whenoneormorecreditorshavenotconsentedtothedebtpaymentprogramme,the Accountant in Bankruptcy may nevertheless approve the programme if it is fair andreasonable.

7.221 Thedebtorusuallymakesasingleregularpaymenttoanapprovedpaymentsdistributorwhodistributessumsreceivedtocreditorsinaccordancewiththedebtpaymentprogramme.

7.222 Withsomeverylimitedexceptions,enforcementactioncannotbetakenagainstadebtorinrespectofadebtincludedinanapprovedDASdebtpaymentprogramme.Formoreinformationvisithttp://www.moneyscotland.gov.uk/das/MoneyScotland/Homepage

7.223 OnlydebtsthathavebeenincludedintheDASprogrammewillbeaffectedbythearrangement.Duringtheperiodofthedebtpaymentprogramme,overpaymentsthathavebeenincludedin theDASprogrammecanonlybe recoveredbymakingdeductions fromongoingHBorprescribedbenefits.

7.224 Oncompletionoftheprogramme,thedebtorwillhaverepaidtheirdebtsinfullunlessthecreditorsagreetoacceptapartpaymentofdebtsinfullandfinalsettlement,orthecreditorsagreethattheprogrammeshouldcompleteearly.Ifthedebtpaymentprogrammeisrevoked,thedebtorremainsliabletocreditorsforallsumsoutstanding.AnyoftheoverpaidbenefitthatisstilloutstandingwhentheDASiscompletedwillhavetobewrittenoff.

7.225 Debtsthathaven’tbeenincludedcanberecoveredbyanyrecoverymethods,bothduringtheperiodwhentheprogrammeisinoperationandafterithasbeendischarged.

7.226 Unlikebankruptcy,sequestrationandtrustdeeds,overpaymentsthathavebeencausedbyfraudcannotcontinuetoberecoveredoncetheDASdebtpaymentprogrammehasbeendischarged.PleaseseeAdministration Order/Individual Voluntary Arrangement/Debt Arrangement Scheme flowchart,laterinthissection.

7.218-7.226

http://www.moneyscotland.gov.uk/das/MoneyScotland/Homepage


September2010 Amdt3


Administration Order (AO), Individual Voluntary Arrangement (IVA),

Debt Arrangement Scheme (DAS)


WastheoverpaymentincludedintheAO,IVA,orDAS?

Theoverpaymentcanonlyberecoveredbymaking

deductionsfromongoingHBorprescribedbenefits

untiltheAO,IVA,orDASisdischarged

AnyamountoutstandingmustbewrittenoffwhentheAO,IVAorDASisdischarged,includingoverpayments

classifiedasFraud,(asdefinedintheClassification and recoverabilitysection,earlierinthis

guide)

TheoverpaymentcanberecoveredbothduringandaftertheAO,IVAorDASis

discharged,usinganyrecoverymethods

Yes No

▼

▼

▼

7.227


Amdt3 September2010


Debt Relief Order

7.228 DebtReliefOrders(DROs)aresuitableforpeoplewithrelativelylowliabilities,littleornosurplusincomeandnorealisableassetswithwhichtomakecontributionstocreditors.Incontrasttootherformsofdebtrelief,DROsaredelivered inpartnershipwithdebtadvisors,primarilyfromtheadvicesector,egCitizensAdviceBureau.Representativesfromtheadvicesectoractas‘approvedintermediaries’andassistdebtorsinmakingtheirapplicationforaDROtoTheInsolvencyService,viaanonlineapplicationform.OnlyanintermediarycanactuallysubmittheapplicationtoTheInsolvencyService.

7.229 Therearecertainrequirements,whichmustbesatisfiedforthedebtortobeabletoapplyforaDRO.Theseare

• thedebtormustbeunabletopayhis/herdebts

• thedebtor’stotalliabilitiesmustnotexceed£15,000(notincludingunliquidatedorexcludeddebts)

• thedebtor’stotalgrossassetsmustnotexceed£300(however,therearecertainitemsthataredisregarded,suchasacaruptothevalueof£1000)

• thedebtor’sdisposableincome,followingdeductionoftax,NationalInsuranceandnormalhouseholdexpenses,mustnotexceed£50permonth

• thedebtormustliveinEnglandandWales,orinthelastthreeyearshavebeenresidentorcarryingonbusinessinEnglandandWales

• thedebtormustnothavebeensubjecttoaDROwithinthelastsixyears,and

• thedebtormustnotbeinvolvedinanyotherformalinsolvencyprocedureatthetimeofapplicationforaDRO,suchas

- anundischargedbankruptcyorder

- acurrentIVA

- acurrentBankruptcyRestrictionsOrderorUndertaking

- aninterimorder

- acurrentDebtReliefRestrictionsOrderorUndertaking

7.230 Ifthereisapendingdebtor’sbankruptcypetition,butthedebtorhasnotbeenreferredtotheDROprocedurebythecourt;orthereisapendingcreditor’sbankruptcypetitionagainstthedebtor,butthedebtorhasnotobtainedthecreditor’spermissionforentryintotheDROprocess,thedebtorwillnotbeeligibleforaDRO.Ifthecreditorhasinformationtoindicatethatthedebtordoesnotmeetthecriteria,theycanprovidethisinformationtotheOfficialReceiver,whomaythenafterconsiderationoftheobjection,revoketheDROifitisappropriatetodoso.

7.228-7.230


September2010 Amdt3


7.231 Uponreceiptoftheapplicationandpaymentofthefee,theOfficialReceiverisabletomaketheDRO,administratively,withouttheinvolvementofthecourt.TheOfficialReceiverisabletomakeanOrderorcanchoosetodelaythedecisionpendingfurtherinformationfromtheapplicant.

7.232 DuringtheperiodthataDROisinforce,thedebtorwill

• beprotectedfromenforcementactionbythecreditorsincludedintheapplication

• beobligedtoprovidefurtherinformationto,andco-operatewiththeOfficialReceiver

• informtheOfficialReceiverofanyimprovementintheirfinancialcircumstances.Shouldthisbesufficienttoallowthemtomakecontributionstotheircreditors,theOfficialReceiverwillneedtoconsiderwhethertorevoketheDRO

• bedischargedfromdebtsincludedintheDROattheendoftheperiod(normally12monthsfromthedateoftheorder)

7.233 Aswithotherformsofpersonalinsolvency,aDROdebtor’screditratingwillbeaffectedandtherewillbecivilandcriminalpenaltiesforthosewhoabusethesystem.TheOfficialReceiverisabletoinvestigate,eitheronhisownaccountorastheresultofanobjectionfromcreditors,whetherthedebtorhasprovidedafullandaccurateaccountoftheirfinancialaffairs.TheOfficialReceiverisabletorevoketheorder,if,forexamplethedebtorhasunderstatedtheirassetsorincome.Failuretoprovideanaccurateaccountmayresultincivilandcriminalsanctions.

7.234 Notifications from the DRO Unit–TheDROUnitissuesallnotificationstocreditororganisationswhenaDROisissuedorintheinstancewhenitisrevoked.AnLAcanprovideTheInsolvencyServicewithacentralemailorpostaladdresstotakereceiptofthesenotifications.Theymustprovidethefollowinginformation

a LAname

b Handlingdepartmentname,telephoneandfaxnumber

c Fullpostaladdress

d Emailaddress(ifapplicable)

e Namedcontact(s)

f Namedcontact(s)emailaddresses

g Namedcontact(s)telephonenumbers

This information should be emailed to [email protected] with a coveringexplanatorynote.

7.231-7.234

mailto:DRO.Unit%40insolvency.gsi.gov.uk?subject=


Amdt3 September2010


7.235 If theLAwouldprefernotificationstobesentelectronicallytoan inbox, thenotificationswillbesentasa.pdfattachmenttoanemailthatwillbeencrypted.ThedebtorinsubmittingtheirapplicationtoTheInsolvencyServiceagreesforinformationtobesentinthisway.Byprovidinganemailaddress/inboxtotheDROUnit,itisassumedthatthepreferredmethodofcommunicationisviaemail.

Note:IftheLAdoesnotprovidethisinformation,notificationswillbesentbysecondclassposttotheaddressprovidedbythedebtorschedulingthedebt.

7.236 OnlydebtsthathavebeenincludedintheDROwillbeaffectedbytheorder.DuringtheperiodoftheDRO,overpaymentsthathavebeenincludedintheDROcanonlyberecoveredbymakingdeductionsfromongoingHBorprescribedbenefits.Anyamountsoutstandingwillhavetobewrittenoffondischarge.Debtsthathaven’tbeenincludedcanberecoveredbyanyrecoverymethods,bothduringtheperiodoftheDROandafterithasbeendischarged.

7.237 OverpaymentscausedbyfraudcancontinuetoberecoveredoncetheDROhasbeendischargedandanyrecoverymethodscanbeutilised.PleaseseeDebt Relief Order flowchart,laterinthissection.

7.238-7.259

7.235-7.259


September2010 Amdt3


Debt Relief Order (DRO)


WastheoverpaymentincludedintheDRO?

TheoverpaymentcanonlyberecoveredbymakingdeductionsfromongoingHBorprescribed

benefitsuntiltheDROisdischarged

Theoverpaymentcanberecoveredboth

duringandaftertheDROisdischarged,usinganyrecovery

methods

Istheoverpaymentfraudulent?(AsdefinedintheClassification and recoverability

section,earlierinthisguide)

WhentheDROisdischarged,the

fraudulentoverpaymentcanberecoveredusinganyrecoverymethods

Yes No

No Yes

Anyamountoutstandingmustbewrittenoff

whentheDROisdischarged

▼

▼

▼

▼

7.260


Amdt3 September2010


Compensation orders (England and Wales)7.261 WhenanLAhasdecidedtoprosecuteaclaimantfollowingfraudulentactivity,youmayapply

tothecourtforacompensationorder.Acompensationorderisintendedtopunishtheoffenderwhilstprovidingsomedegreeoffinancialrecompensetothevictim.

7.262 Whenmakingtheorderthecourtwillconsidertheoffender’scircumstancesandabilitytopay.Acompensationorderwilloftennotcoverthefullamountoftheoverpayment.

7.263 Whenanorderhasbeenmadetheoffenderwillberequiredtopaythemoneytothecourtwhowillthenpassiton.Theoffendermaynotbeaskedtopayinonelumpsumifthecourtconsiderstheycannotaffordtodosoandmayarrangetopayininstalments.

7.264 It isgoodpracticetocontacttheclaimanttoadviseifthereisanydifferencebetweentheamountofcompensationordertopayandtheoutstandingbalanceoftheoverpayment.TheLAcancontinuetorecovertheoutstandingbalancebutshouldwaituntiltheyknowhowmuchtheyaregoingtogetbackviathecompensationorder.

7.265 IfthedebtordisputestheLA’srighttorecoverthebalanceoftheoverpayment,forexamplebecausetheythinkthattheorderreplacedtheoverpayment,itshouldbepointedouttothemthat

• thecompensationorderwasimposedbytheCourtaspartofthesentencefortheoffenceforwhichtheywereconvicted

• itdidnotreplaceorremoveanyassociatedfraudoverpayment,determinedundertheHBorCTBregulations

• anypaymenttheymadetotheCourthasgonetowardsthecompensationorder,nottheoverpayment

• theLAhasvoluntarilytakenintoaccountanypaymenttotheCourtforthecompensationorder against the associated fraud overpayment, even though there isno requirementundertheHBorCTBregulationstodoso.Anyoutstandingbalanceoftheoverpaymentisthereforerecoveredasappropriate

7.266-7.999

7.261-7.999


Amdt3 September2010


Information – courts

Information (England and Wales)

Furtherinformationisavailable

• usefulweb-site:http://www.hmcourts-service.gov.uk

• formsandleafletsareavailableonthiswebsite(includingFormN332A–Applicationtoenforceanaward).Theycanbedownloadedorprinted

• localCountyCourtswillhavecopiesoftheformsandleafletsshouldanLArequirehardcopies

• AllfeesshouldbemadepayabletoHERMAJESTY’SCOURTSERVICE

• currentfeesarelistedontheabovewebsite,‘GuidetotheCountyCourtfees’

• addressesoflocalcourtsareavailableonthiswebsite

Forms

The following is a list of useful forms/leaflets available from the courts, including a briefdescriptionofthecontentsoftheleaflet

Form Description

N322A Applicationtoenforceanaward

(Thisistheformyoushouldissuetothecourttoapplyforan‘order’

tobemadeagainstyourdebtor.Thisformshouldbecompletedwith

therelevantdetailsalongwiththeoverpaymentnotificationandthe

relevantfee.Acopyisincludedattheendofthissection.

N323 Requestforwarrantofexecution

N324 Requestforwarrantofdeliveryofgoods

N325 Requestforwarrantforpossessionofland

N336 Requestandresultofsearchintheattachmentofearningsindex

N337 Requestforattachmentofearningsorder

N349 Applicationforthirdpartyorder

N379 Applicationforchargingorderonlandorproperties

AnnexA

http://www.hmcourts-service.gov.uk


September2010 Amdt3


AnnexA

Leaflets

Leaflet Description

EX50 Civil and Family Court Fees - High Court and County Court (From

July 2009).Thisincludesinformationonfeesincludingcostsof

enforcementoforders.

EX301 I’m in a dispute - what can I do?Thisincludesinformationonhowto

tryandsettlematterswithoutgoingtocourtetc

EX321 I have a judgment but the defendant hasn’t paid - what do I

do?Enforcingyourjudgment(generalprocedures),thisincludes

informationofwhattodotoenforceyourorderifthedebtordoes

notpay.

EX322 How do I ask for a warrant of execution?

EX323 How do I ask for an attachment of earnings?

EX324 Orders to obtain information - how do I apply for an order?Thisisnot

anenforcementoptionbutallowsyoutoobtaininformationabout

debtorsincome,thiscouldhelpyoutodecidewhetheradebtorcan

payandwhichmethodofenforcementismostlikelytoobtainyour

monies.

EX325 Third party debt orders/and Charging orders – how do I apply?


Amdt3 September2010


Form N322A (County Court form)TheformN322Ainthisannexissuitableforprinting/photocopying.Youcanalsodownloadacopyfromthecourtwebsite–http://www.hmcourts-service.gov.uk/HMCSCourtFinder/FormFinder.do

AnnexB


N322A Application for an order to allow enforcement of a decision or ACAS conditional settlement (Form COT3) that requires permission to proceed (06.09) © Crown copyright 2009

Name of court

Claim number (To be completed by the court)

Applicant

Respondent

1. Applicant’s details

Name of applicant

Applicant’s address

Postcode

Telephone no. Ref.

Email address

Application for an order to allow enforcement of a decision or ACAS conditional settlement (Form COT3) that requires permission to proceed

Address for service (if different from opposite)

Postcode

2. Respondent’s detailsName of respondent

Respondent’s address

Postcode

continued over the page

What is the name of the Tribunal/court that granted your award.

Give the reference number of your decision

Please give details of the legislation that allows you to enforce this decision

A copy of the decision or ACAS conditional settlement (Form COT3) is attached.

The applicant applies to enforce a decision Dated / /

settlement Dated / /(If settlement, go to section 1 - Applicants details)

and for an order that the respondent pay the costs of this application.

Click here to print formClick here to reset form

2

3. The amount now owing and the costs claimed

The amount of the decision/settlement (including costs) £

If your legislation allows you to claim interest on the amount award please complete this section. You must show details of your calculations.

[Interest on £

from / / to / /

at %

]

or

[As shown in the attached calculation] £

sub-total £

Less amount paid £

Balance remaining unpaid £

Court fee £

Solicitor’s costs £

Total now owing £

4. ACAS conditional settlement (Form COT3)

I certify that

I have the applicant has

complied with the terms contained in the notice of settlement.

By (please give details - continue on a separate sheet if necessary)

Condition 1What was the condition attached to your settlement?

Please give details of how the condition has or has not been fulfilled?

Condition 2What was the condition attached to your settlement?

Please give details of how the condition has or has not been fulfilled?

3

Full name

Name of applicant’s solicitor’s firm

Position or office held

(if signing on behalf of firm or company)

Signed Dated / /*(Applicant) (Litigation friend(where applicant is a child or a Protected Party)) (Applicant’s solicitor)

*delete as appropriate

I believe The applicant believes

that the facts stated in this application are true.

5. Declaration in ACAS matters

I certify that a declaration that this sum would not be recoverable against the respondent under general law of contract has not been made and that no application for such a declaration is pending.

�

6. Statement of truth

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