An attachment of an earnings order is a culmination of events revolving around a creditor’s attempt to get back their debt. It’s one of many court orders you’ll have to deal with if a creditor is bent on collecting on debt you’ve defaulted on. Recipients of an attachment of earnings order often end up forfeiting a certain portion of their income for a certain period as per the court’s discretion or paying either the full amount or an agreed sum upfront.
However, exemptions may apply. There are some circumstances where an AEO cannot be used to collect a debt.
If you’ve found one at your doorstep or are exploring ways to force your debtors to pay up, we’ll be looking into the fine details of an attachment of the earnings order. We’ll explore the processes involved, the inner workings, and your options when served with one.
What is an Attachment of Earnings Order?
An attachment of earnings, often miscalled an attachment to earnings, is a legal proceeding that compels an employer to deduct part of an employee’s earnings towards settling their debt. The deductions continue until the amount determined by the court is paid back.
How Does an Attachment of Earnings Order Work?
An attachment of earnings is one option a creditor has to enforce a County Court Judgement against a debtor. Until recently, AOEs were issued only when a debtor misses a repayment. Now, creditors don’t even need to wait for that to happen.
After a court case runs its course, the verdict ruled against the debtor, and the defendant brought to notice on multiple occasions, the creditor is free to apply for an AEO immediately. If the order comes within 7 days of the end of the month, the deductions will begin rolling the following month to allow you ample time to adjust your finances.
Other alternatives to an AEO include getting a bailiff and charging orders.
AOEs can be used to recover many types of debts, from personal loan debt to credit card debt, rent arrears, and utility debt.
County councils can also use an AEO to collect a council tax debt. It works the same in this instance, and a portion of your income will be deducted weekly or monthly to service your debt.
How Does an Attachment of Earnings Order Affect your Job?
An AEO can lead to serious consequences in your workplace. It might constitute grounds for disciplinary action or even dismissal, especially in highly sensitive jobs that require a high level of credibility and trustworthiness. In some instances, you might lose your license to work in certain roles, but it’ll most likely be reversed when you clear the debt.
There are usually no harsh repercussions for most employees. But you can make things worse if you don’t comply. And if you change jobs without telling your new employer about your AOE, you might be charged with a jailable crime. When taking on new jobs while under an AOE, it is your responsibility to bring your new employers up to speed with your AOE.
How Much is Usually Deducted for an AOE?
When you’re served with the notice, you’ll have to declare your finances on a form attached to the proceedings. The court will then use that to decide how much should be deducted from your income. According to the UK Gov website, the usual amount is £25, but that’s not a given.
AOEs charges for council taxes work a bit differently. Since your taxes are already fixed as a percentage of your wage, your AEO amount will be charged based on percentages. You’ll most likely find a detailed breakdown of the possible charges on your council website.
Nonetheless, you’ll be given a fair chance to negotiate the AEO amount to be deducted from your income. You’ll have 14 days from the date of service to dispute the payment amount, and you can do that during a court hearing. If your case is strong enough, a new order will be issued reflecting the newly agreed amount.
You might also have another chance to appeal the AEO amount outside the initial 14-day window if your situation has changed significantly – if your wages have dropped or you’re welcoming in a new member of your family.
What Happens When You Have Multiple Attachment of Earnings Order?
If you receive a new AEO when you already have one or more in existence, you could ask for all to be consolidated into one AOE. With that, the court will deduct a single payment, albeit a bigger one, from your income, and then share it among all your creditors.
For this option, you need to apply to the court in writing, stating the details of all the AEO and CCJs you want consolidated, your financial statement, and the monthly amount you want to be deducted. Once the application is approved (as is the case most time), your creditors will be informed and they’ll have 14 days to respond. If there are no objections, then your consolidated payments will begin rolling the following month, without any hearings.
How to Prevent an Attachment of Earnings Order
To discuss this, let’s start by looking at cases where a debt judgment cannot be enforced using an AOE:
- Self-employed – where there’s no employer to hold accountable for the deductions
- Unemployed – Where there’s no income to even talk about in the first place
- Armed servicemen – Employees of the army, navy, or air force (require a different process)
- Employed on a non-fishing boat
- During maternity leave – statutory maternity pay is exempt from AEO deductions.
- During sick leave – Statutory sick pay is also exempt from AEO deductions, so long as it’s the only source of your income during the sick leave.
- Minimum wage requirements – you’re also exempt from AEO deductions if you don’t earn more than £75 weekly or £300 monthly.
Outside these exemptions, you’ll probably have no choice but to face up, negotiate, and pay your debt once there’s an AEO at hand.
To avoid paying the AEO deductions, you can either choose to pay the debt in full or to dispute the monthly deductions suggesting a more affordable amount.
Albeit, it’s usually best to settle your debts out of court. But if you do have legitimate reasons for not paying your debt, a few options might offer you a saving grace. For one, you can explore many other debt financing options, or you can buy yourself more time with a Debt Relief Order, which stops your creditors from requesting their payment throughout a year.
Consult with a debt management advisor today and let’s help you explore your options.