Diligence

"Diligence" covers the legal tools available for debt enforcement within Scotland.

Types of Diligence
Diligences available depend on the asset, and whether a freeze or sieze diligence is sought.

Inhibition
An inhibition is a freeze diligence against heritable property. It is not directed against any piece of property in particular, but against the person and prevents them from voluntarily transferring any piece of heritable property to another person.

It is enforced by having the serving a "Schedule of inhibition" to the person, and this is also recorded in the Register of Inhibitions and Adjudications. It lasts for up to 5 years. It can be discharged against a specific property, or discharged completely when the creditor is satisfied (eg, when the debt is paid).

Note the term "Voluntary transfer", if the person to be inhibited has already agreed a contract of sale in relation to a property then the transfer is no longer voluntary and would be unaffected by an inhibition that post-dates the contract of sale. It is also ineffective against rights in a standard security (mortgage) or other non voluntary transfers.

To help avoid the situation of a creditor disposing of assets in a fire sale should he become aware that an inhibition is imminent, a "priority notice" can also be placed into the register in anticipation of seeking an Inhibition in the court. When placed up to 21 days before the inhibition being registered, it effectively backdates the diligence to when the notice was issued.

Adjudication
Adjudication is a seize diligence against heritable property. It usually takes place after an inhibition, and is a second action taken in the court of session. Unlike an inhibition, is is effective only against a specific piece of property.

An Adjudication allows the creditor to remove the debtor from the property and rent out the property for up to 10 years. It does not confer ownership.

If after 10 years the amount outstanding remains unpaid, the property can be sold; any surplus after the debt is paid is turned over to the (former) debtor.

Legislation has been passed to abolish Adjudication, but as of April 2015 this is not yet in force.

Attachment (non money)
Attachment is a Sieze dilligence for moveable property.

After serving notice, and waiting for the requisite period, a court officer will inventory the goods and note any disputed claims of ownership - possession creates a presumption of ownership, but this can be disputed to the court officer or the sherrif.

The petitioner then has 6 months to remove and sieze the goods to be sold at auction; any surplus raised is returned the the Debtor, whilst if a debt remains any surplus goods remain in the creditors ownership in exchange for their value (surplus again returned to the debtor).

Without an exceptional attachment order goods "Inside a dwellinghouse" cannot be siezed. Tools, vehicles with a value under £1000 and mobile homes used as a residence cannot be siezed, neither can money.

Only if there is no other option can an exeptional attachment order be issued. This would basically require there to be no other option. This is governed by Section 47 of the Debt Arrangement and Attachment (Scotland) Act 2002

Money Attachment
This follows a similar proceedure to a regular attachment, and allows officers of the court to search the debitor's house for money up to the value of the debt. Money includes foriegn money (which must be converted into sterling) and banking instruments. AFter this is complete, the creditor can request the court to disperse the funds to him, and any overpayment is returned to the (former) debtor.

Possession is again presumed to imply ownership, but third party owners can apply to have their property returned, although money owned "In common" will not generally be returned unless its shown that the action of taking it was unduly harsh.

Items which have a value greater than their face value, such as rare coins, are not counted as money.

The Debtor can apply for money to be returned if its impact is unduly harsh.

This can only be carried out on days other than Sunday and bank holidays (unless the order instructs otherwise) between 8am and 8pm, and cannot be used to gain cash in a dwellinghouse.

Arrestment
Arrestment enables the creditor to sieze property owned by the debtor in the custody of another. The key example of this is money in a bank account, but can include goods in a storage facility, and ships.

Benefit payments cannot be arrested, whether in the government's hands or not, and the minimum balance left in a bank account after arrestment must be £415.

Earnings Arrestment
Where a person is employed, an earnings arrestment can be served on the employer, directing them to turn over a portion of the earnings to the creditor. Regulations control how much will be required.