An Attachment of Earnings allows money to be taken from your wages to pay a debt. This can be overturned using an IVA.
Included in this article:
- What is an Attachment of Earnings?
- Will an IVA stop the wage reduction?
- Does an IVA protect against future court action?
What is an Attachment of Earnings?
If you do not pay your debt after a CCJ (County Court Judgment) has been issued further enforcement action can be taken. One option available to the creditor is to apply for an Attachment of Earnings.
Once such an Attachment is granted the Court will order your employer to deduct an agreed amount from your wages. This is then paid directly towards the debt. You receive what is left in your wage packet.
Having money taken from your wages like this can cause significant problems. You are no longer in control of this debt payment. As a result you may be left without enough to cover your other financial obligations.
It may be possible to reduce the amount deducted from your wages by applying to the Court for a Variation Order.
Will an IVA stop an Attachment of Earnings?
The Attachment is stopped if you start an IVA. Once the Arrangement is agreed all the creditors that are included are legally bound to its terms.
They are no longer allowed to recover the money you owe them in any other way. Given this any deductions directly from your wages for the payment of their debts must be cancelled.
If money is currently being deducted from your wages this must be taken into account when calculating your IVA payments. Your income figure should be considered without the deduction as this will be the reality once the Arrangement is in place.
If you already have an Attachment of Earnings in place you may think you cannot afford to start an IVA. However the fact that this deduction will stop may mean the Arrangement is affordable.
Does an IVA protect against future Court Action?
Once you start an IVA you receive legal protection from your creditors. They are no longer allowed to start Court action against you. Further applications for an Attachment of Earnings cannot be made.
In addition if an application is already being considered by the Court it must be withdrawn. All actions currently being undertaken by creditors included in the Arrangement must be dropped.
Having said that you are only protected from the creditors you have included. Secured debts and debts incured after the start date do not fall into this category. If you fail to pay these legal action can still be taken against you.
You should not borrow more during your IVA. If you do you are not protected from the new creditors. They are free to apply for a CCJ and Attachment of Earnings against you in the event of non payment.