When you owe debt, sometimes your bank account will be frozen until it is repaid. This is called a bank arrestment. Whilst it is perfectly legal in Scotland, it usually causes problems for those with the most financial harship. A problem which Citizens Advice, including the local team at East Dunbartonshire Citizens Advice, has been fighting to solve is when a bank arrestment occurs with benefit money. UK law protects benefit income from being taken by creditors, but it is often taken anyway. In this blog we’ll talk about bank arrestments, and what to do if you are affected by one.
Who has the power to perform a bank arrestment?
Bank arrestments in Scotland are used mostly by local authorities, and specifically in relation to council tax debt. Arrestments can only be carried out with a court order. You will normally only know that your bank funds have been arrested once it happens. However, you are able to appeal if you think it is unjust. CAB beleive them to be particularly harsh forms of debt recovery.
What happens to benefit money in my account?
In theory, the banks should not arrest benefit money. In a recent article by Myles Fitt, CAS Strategic Lead for Financial Health, he said:
“For those on the receiving end of a bank arrestment, there is often benefit income in their bank account, some may have solely benefits income while others have a mix of earnings and benefits. The problem is that while UK law protects benefit income from being taken by creditors, it gets taken anyway. When dealing with arrestment orders, banks point to it being too onerous and challenging to work out what income is deemed earnings and what is deemed benefits.“
This means that although banks should not take your benefits money, they probably will. That’s because it is too hard to decide what is benefit and what is earned money. This is what the Citizens Advice are fighting against.
Myles Fitt also said: “Citizens Advice Scotland believes that a solution can and must be found to prevent the arrestment of benefit payments. Banks surely have the ability in this digital and AI age to figure out what is and what isn’t benefit income. Local authorities must have the insight to know when someone is on benefits and therefore should not be subject to a bank arrestment.
Thankfully, the Scottish Government agreed with the view of the money advice sector that this practice needed closer examination and a clear resolution. So, during the passing of the recent Bankruptcy & Diligence (Scotland) Act, the government promised to consult with various stakeholders, with a view to agreeing a way forward.”
To read Myles’ article in full, click here.
Stopping bank arrestments
If you have discovered that your bank funds have been arrested, then do get in touch with us. East Dunbartonshire Citizens Advice can immediately help advise you on what to do next. There is nothing stopping further arrestments being made on your account. This means you should be wary if more money is due to be put into that account. We can help point you in the right direction if you wish to appeal the decisions made against you. Get in touch with us today for help.
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