Does an earnings arrestment still fall on the award of Sequestration?
Question:
Does an earnings arrestment still fall on the award of Sequestration, even in the wake of the new Bankruptcy and Debt Advice (Scotland) Act 2014 (‘BADAS’)? What if it was executed within a 60 day period before the date of sequestration?
Answer:
Yes, an earnings arrestment still ceases to have effect on the date of sequestration: meaning either the date of the award if it’s a debtor application or, in the case of a creditor petition, the warrant to cite date. This is set out in detail in s72 of the Debtors (Scotland) Act 1987.
As regards the timing of the execution of an earnings arrestment and the so-called 60 day rule, the Bankruptcy (Scotland) Act 1985 is quite clear: the provisions in relation to diligence by a creditor do not apply to earnings arrestments (s37 (5A)). The 60 day rule only applies to arrestments and attachments. There are 60 day provisions applying to inhibitions too.
However, it is worth bearing in mind that following the implementation of BADAS there is now an optional 6 week period of moratorium and any earnings arrestment that that is in place before the moratorium starts, continues. It only stops in the event of sequestration, whereas if there is no earnings arrestment in place before the moratorium begins, the moratorium stops a new earnings arrestment.
