Until commencement of Part 10 of the 2007 Act, arrestment is predominantly a common law process. It is an action by a creditor to arrest or freeze funds or goods belonging to a debtor in the hands of a third party.
Arrestable funds or goods include:
- Funds held in bank or building society accounts
- Goods owned by a debtor but in the hand of a third party, for example, goods in a warehouse or in storage
- 'Incorporeal' property such as rights under a trust, for damages or due under life assurance policies
Currently arrested funds or goods cannot be taken into a creditor's possession or sold without an action of furthcoming.
Section 10 of the 2007 Act inserts Part 3A into the Debtors (Scotland) Act 1987 and will make significant changes to arrestment and actions of furthcoming.
Section 10, is expected to be commenced in April 2009.
(However, a small provision of Part 10 was commenced from 1 April 2008 only insofar as it is necessary for a creditor pursuing debt through the summary warrant process, to serve a charge for payment prior to proceeding with arrestment.)
Changes expected to be commenced in April 2009 include:-
- The arrestee will have a duty to disclose to the creditor what has been arrested
- An action of furthcoming will no longer be necessary for the release of funds arrested. Funds are automatically released after 14 weeks if no objection is lodged
- A protected minimum balance in bank accounts will be introduced
- Funds arrested will be limited to the amount due to the creditor