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Cancelling Payment Protection Insurance
An attachment of earnings order is an order by the court which requires money from the earnings of a judgment debtor (a person who owes money to another and is ordered by the court to pay such a sum) to be deducted in order to pay the debt owed.
It is a very useful method of enforcing a debt in circumstances where the judgment debtor does not have any other substantial assets but is in paid employment.
Judgment debtor must be in arrears of payment of the debt (at least one)
The amount owed must exceed £50 (Attachment of Earnings Act 1971)
wages
salaries
fees
bonuses
commission
overtime payable under a contract of service
occupational pensions
State pensions
Benefits or allowances
The following judgment debtors are excluded from an attachment of earnings order:
Self-employed
Unemployed
Firm or limited company
Merchant seaman
Person in the army, navy or air force
However it is still possible to obtain money from a judgment debtor who is in the air force, army or navy or who is a merchant seaman.
If a person is unsure as to whether or not the judgment debtor is employed, he or she may be able to obtain this information by one of the following methods:
An application to the court for an order to obtain information where if granted the judgment debtor will be questioned regarding his or her employment status.
A request to the Court for a search of the attachment of earnings index (index which lists all existing attachment of earnings order) in the debtor’s local area to determine if he is listed.
A request to the Court for a consolidation of debts if there is a pre-existing attachment of earnings order against the judgment debtor.
Upon an application by a creditor for an order to obtain information from a judgment debtor, the Court will require such a debtor to attend Court in order to answer questions on his or her financial status including the amounts involved, account names, numbers and policy numbers as well.
Application procedure for obtaining information
Form N316 must be used (can be obtain from the Court)
Identity of the judgment debtor must be specified
Judgment debtor’s name and address must be stated
The amount presently owed must be stated
Request can be made for specific documents to be produced as evidence
The current cost of an application for an attachment of earnings order is £100. The fee is required for each judgment debtor against whom an application is requested.
The application for a consolidated attachment of earnings order currently cost 10 pence for every £1 or part £1 of money that is paid to the Court is deducted before it is paid out to the specified creditors under the order.
The Court may adopt one of the following options upon receiving an application for an attachment of earnings order:
Require the judgment debtor to pay the money owed
Require the judgment debtor to provide details about his employment, income and expenditure
Statement of Means
The court will examine the statement of means by the judgment debtor to determine the amount the judgment debtor is able to pay. However any repayment is subject to the protected earnings rate.
The protected earnings rate is the amount of money a judgment debtor requires to maintain himself and his family on a weekly or monthly basis. If the judgment debtor’s earnings exceed that of the protected rate an order will be made.
The protected earnings rate includes the following expenses:
Food
Rent
Mortgage
Usual bills such as electricity and gas
An order by the Court will be sent to the judgment debtor’s employers who will be instructed to do the following:
Make periodical deductions from the judgment debtor’s earnings
Pay the amount to the collecting officer as specified in the order or as the Court may decide. (The Centralised Attachment of Earnings System that is based in Northampton is responsible for the collection of payments.)
However it is possible for the judgment debtor to make the payments directly to the creditor subject to the Court’s agreement.
An attachment of earnings order is an effective way of recovering an outstanding debt. However payment may not be received in the following circumstances:
Judgment debtor has become unemployed
Judgment debtor has changed jobs
Judgment debtor is not earning enough money to make payments
However, if a judgment debtor has changed jobs a creditor can request from the Court a reissue of the order to the new employer.
The County Court has jurisdiction to hear applications for an attachment of earnings order. The High Court does not have any power to make such an order and as such any High Court claims will be transferred to the County Court for enforcement. However, the Magistrates’ courts have limited authority to make an attachment of earnings order, such as enforcing payment of council tax arrears.
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