In Scotland, you have only five years to pursue your debts, failing which they expire, unless you have an admission that the debt is due, which interrupts the prescription progress. Court action is considered such an interruption.

Court actions are currently divided into three types:

• Small claims are actions up to and incuding £750
• Summary Causes are actions of between £750 and £1500
• Ordinary Actions are those of £1500 or above

For consumer cases, you require to sue in the courts where the defender lives.

The summonses for small claims and summary causes are warranted by the court and receive court calling dates some 2/3 months hence.

We serve the summons by recorded delivery firstly, giving the debtor 21 days’ notice. If the intimation is returned for whatever reason, say ‘gone away’ or ‘no answer’, the summons is re-served, if there is sufficient time before the calling date by sheriff officers, your bailiffs. If there is not, then we are required to obtain a continuation of this date to another one when we can then serve it straight away by the officers.

Ordinary actions are quicker to decree (judgment) in that the court warrant states the writ and forms are to be served with a period of notice of 21 days and this can be done straight away on receiving the warrant.

After 21 days, and service was effective, we minute for decree (judgment) to be extracted and this is usually issued 3 or 4 weeks later, but no earlier than 2 as there is a period of appeal for 2 weeks.

When there is no appearance in the summary cause and small claims cases, the decree is granted in absence and the courts issue the extract decree usually within 4 weeks.

The enforcement of a decree is called diligence

The next step is for the decree to be enforced as follows:

• 1. Charge
• 2. Attachment or Earnings Arrestment
• 3. Inhibition and Arrestments in the hands of banks or third parties.
• 4. Sequestration

1. Charge

This is the precursor to the steps 2-4 and requires to be served upon the defender by the sheriff officers. They are not officers employed by the court but are private firms who depend on good reports for more business. The Bankruptcy and Diligence Act changed their names to COURT ENFORCEMENT OFFICERS. They may also trace debtors.

They proceed to serve the charge which is a legal charge which must be served before any other diligence (enforcement) can proceed. The debtors have 14 days to pay and they are charged the interest if any, as well as the principal sum and expenses which have been granted by the court.

2. Attachment or Earnings Arrestment

If the debtors are employed, the Sheriff Officers are encouraged to ascertain this information unless you have this information already. Provided they check this, they are then instructed to instruct the earnings arrestment. This applies the month thereafter and the employer is obliged to deduct certain sums, as fixed by statute, thereafter until the debt is paid unless there is an application for a conjoined arrestment order, where more than one creditor can enforce their debts at the same time from the income of the debtor.

The Debt Arrangement and Attachment (Scotland) Act 2002 overturned the old practice of ‘poindings’ and introduced restrictions to the attachments making the process more humane. It is little used by us in practice but is useful if the debt is less than £1000 and they have a car which is not on Hire Purchase etc.

3. Inhibition and Arrestments in the hands of banks or third parties.

Inhibitions can be applied for at the warranting stage of an initial writ, i.e. upon the dependence of an action. This is an application which requires to be dealt with by the Court of Session, although it will change this year and applications will be able to be made in the Sheriff Court, making it less cumbersome and less expensive.

It is not hugely expensive if it is granted without a hearing but you do require a very good reason for seeking it prior to the Extract Decree (judgment) being granted. The Inhibition is then served and registered and lasts for 5 years. It can be extended by renewal.

The easier course is to wait for the Extract Decree to be issued and then the court should process the application without any query. The costs are approximately £150 plus outlays of £100.

If the debtor is self employed, you may arrest in the hands of third parties, i.e. people they are working on contracts with or you can sequestrate them. You can also arrest their bank accounts provided they are in Scotland and in credit. This may be done with the leave of the court before Decree, and you need to have a good reason for seeking that award. I.e. bounced cheques or direct debits. You can arrest once the Decree is granted in the hands of Banks/Building Societies where the debtors hold accounts or in the hands of third parties due to pay them out money.

4. Sequestration

In a sequestration the court orders that the assets of a debtor are transferred to a Trustee, on the application of either the debtor or one of their creditors. The debt must be £1500 or more. In all cases the debtor must be 'apparently insolvent', which in most cases means that a creditor has tried to enforce a debt without success. The petition may be presented after a charge expires or a statutory demand has not been denied within 21 days. The procedure must take place within 4 months of the expiry of the charge or demand or the creditor will have to issue a fresh charge or serve a fresh demand.

The petition is presented to the court and we can apply to have an Interim Trustee appointed at this time to protect the interests of creditors. It is a useful application where they are e.g., trading. The court appoints a date for the calling of the sequestration some 6 weeks hence and if the debt is not paid by then or a suitable arrangement made, the court will be moved to sequestrate them when their assets will be engathered by the Trustee and realised for the benefit of creditors. The creditor can nominate his own accountant, e.g., if he has a preference for someone he knows will turn every stone to realise the assets of sequestration or he can appoint the Accountant in Bankruptcy. The latter is free of charge at the moment, but as there are many cases being dealt with by this agency, the attention to detail is perhaps less than that of the standard Insolvency Practitioner whose fees will depend on the realisation of the assets. Contributions will be sought from the debtors towards the estate from their income on almost every occasion.

When sequestrated the debtor is subject to various restrictions, including asking for more credit. At the end of the sequestration the debtor is discharged, and in most cases that takes around three years although this may be extended. It will be reduced to one year once the Bankruptcy and Diligence Act is in force. The legal restrictions are then lifted but the practical effect can last for a lot longer. For example, it may be many years before the debtor can obtain another mortgage or credit.