Are you feeling anxious after being notified about an unpaid debt? Are you worried about the Centralised Attachment of Earnings Payment System (CAPS) being activated? In this post, we will explain everything you need to know about CAPS. So, stay tuned.
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What is the Centralised Attachment of Earnings Payment System (CAPS)?
Apart from the use of bailiffs to seize a debtor’s assets for non-payment, there are other ways in which a debt can be recovered. Centralised Attachment of Earnings Payment System (CAPS) is one of them.
CAPS isn’t just any debt collection method. It’s a systematic approach facilitated by the UK Justice Department. It works in the following way:
- Debt Collection Mechanism: If you miss payments on a debt, CAPS can be activated.
- Government-Operated: The system is managed by the government, adding a layer of formality and regulation.
- Court-Driven Process: It’s used after a court has determined that you owe money.
Your paycheck is hard-earned, but CAPS can redirect a portion of it before it even lands in your bank account.
The process involves several steps and parties:
- Court Order Issued: The court issues an order based on the debt owed.
- Employer Notification: Your employer is informed about the order and the amount to be deducted.
- Deduction from Wages: The specified amount is then deducted from your wages and directed towards the debt.
One key aspect of CAPS is the balance between debt recovery and your privacy. Your employer will know about the debt collection but not necessarily the details of the debt. Also, you’re not required to disclose the reason for the debt to your employer.
When Does the Centralised Attachment of Earnings Payment System (CAPS) Take Place?
CAPS doesn’t happen for every debt. It targets particular debts, not all of them. Your employer plays a crucial part in this. They’re the ones who’ll handle the deductions from your wages. CAPS comes into play for:
- Debts under a County Court Judgement (CCJ): If a court says you owe money.
- Unpaid Maintenance: If you’re falling behind on maintenance payments
What Is Deemed To Be Earnings?
When it comes to the Centralised Attachment of Earnings Payment System (CAPS), not all money you receive counts as ‘earnings.’ Below is a simple breakdown of this:
Included in CAPS:
- Salary or Wages: Your regular paychecks.
- Overtime, Commissions, Bonuses: Extra earnings beyond your base salary.
- Compensation Payments: Any financial compensation you receive.
- Private Pension Payments: Money from your private pension.
- Certain Sick, Maternity, Paternity, or Adoption Pays: But only if they’re part of your contract.
- Contractual Redundancy Pay: Payments as part of your job termination agreement.
Excluded from CAPS:
- Overseas Income: Money earned outside the UK.
- State Benefits: Like universal credit.
- State Pension: Your government pension.
- Tax Credits and Disability Allowance: Financial support from the government.
- Statutory Maternity, Paternity, Adoption, Redundancy Pays: Standard government-supported payments.
How Is a CAPS Order Applied For?
When a CAPS order comes into play, it’s a process that involves both you and your employer. Both you and your employer get an ‘attachment of earnings order’ from the court. Afterwards, the employer must start making deductions from your next paycheck. If payday is within 7 days, there might be a slight delay.
The court informs the employer of the amount you owe and the deduction details. This includes whether it’s a priority order and the exact amount to deduct. Sometimes, they might need to pay the court more frequently than your pay cycle, such as weekly or bi-weekly.
You’re not required to tell your employer why the order was issued. You don’t have to share details about the debt or other financial issues. Unless, of course, your job contract specifically asks for such disclosures.
Some jobs require the employee to disclose such information, especially if they are working in a sensitive position that might become compromised because of the debts.
The information that the court will provide the employer includes:
- The amount that the employee owes
- Whether the CAPS is a ‘priority order’ or a ‘non-priority order’
- The normal deduction rate (NDR) states the amount that the employer should deduct from the wages.
- The protected earnings rate (PER) states the minimum amount the employee must take home.
- How often the employer is required to make payments to the Centralised Attachment of Earnings Payments office or to the magistrates court (e.g. monthly or weekly)
What Are Priority and Non-Priority Orders?
Priority Orders are all about unpaid maintenance debts. Whereas, Non-Priority Orders deal with debts covered by a County Court Judgement (CCJ).
Whether it’s a priority or non-priority order, your employer follows the same procedure. The labels ‘priority’ and ‘non-priority’ are more for court administrators.
Making Deductions for Priority and Non-priority Orders
When making deductions for a non-priority or priority order, the employer should:
What Happens If I Have Another CAPS?
If you have another CAPS, the order will be joined to make a ‘consolidated order’. Anyone involved in the order, including the employer, can request for a consolidated order. The court also has the right to do this. If this is to be done, a letter should be written to the court.
With a consolidated order, the employer will take one amount from the wages of the employee to cover all the orders. The payments will be kept at the court until the court gets a certain percentage of the total debt (this is usually 10%).
Afterwards, the court will divide the amount according to the size of each debt. So, each creditor will get their share of the money. This is known as ‘declaring a dividend’. When there is a consolidated order, the amount the creditor receives will be lower than the money they would receive under an ordinary attachment of earnings order.
The creditor will be notified if the court is asked to make a consolidated order. But if the creditor doesn’t want it to be consolidated, they have the right to send a letter to the court within 6 days of the date shown on the postmark of the envelope.
The court will make an appointment, and the creditor will have to go to court. If the creditor does not go, the judge will decide to make an order without them there.
CAPS and Changes in Circumstances
Life changes, and sometimes, so does your job. If you stop working or switch jobs, your employer has a crucial role here. They must inform the court within 10 days of your last day. The employer should report:
- Your name
- The date you stopped working
- Your new employer’s name (if you’ve shared it)
- The order number
- The court case number
Surprisingly, you have less to do here. If you change jobs or leave, you’re not required to report anything to the court. But, it’s best to remind your employer that they should inform the court that you have stopped working or changed jobs. If the employer fails to report this, it will be you who should answer as to why you have not made payments.
When Does a CAPS Stop?
The employer should continue deducting the amount once told to do so. But the employer can stop once the court asks them to. A CAPS will also stop if the employee leaves the workplace or the amount to recover is covered in full.
How Do I Avoid Getting Into Debt That Might Lead to CAPS?
If you want to avoid situations where you will experience CAPS, the best option is to pay the debt. But if you’re unable to pay the debt, you can request a payment plan. But make sure to only agree if you’re sure you can afford it. If you agree to a payment plan and fail to make payments on time, the creditor might take action against you.
You can also consider taking up a debt solution. There are many debt solutions available in the UK. Some of them even help debtors to write off debt completely.
But note that while the right debt solution helps to write off debt, picking the wrong one will be expensive and might even worsen your situation. So, we recommend that you get some advice from a debt charity before you make the choice. Alternatively, feel free to fill out our online form, and our MoneyAdvisor team will guide you.
Some debt solutions available in the UK that you can consider taking up include:
Contact Details for CAPS
If you’re feeling overwhelmed by the prospect of wage deductions under CAPS, help is just a call or an email away. The team handling CAPS is accessible and ready to guide you through any queries or concerns you might have.
| Email: | caps@justice.gov.uk |
| Telephone: | 0300 123 1058 |
| Opening times: | Monday to Friday, 9 am to 4 pm |
| Address: | 5th Floor, St Katharine’s House 21-27 St Katharine’s Street, NorthamptonNN1 2LH |
Getting More Help with Your Debts
If you’re struggling with debt, there is help available. The UK has many debt charities that offer advice and support free. For example, the Citizens Advice Bureau (CAB) consists of experts in debt-related issues and can offer practical advice. They’ll help you figure out a manageable monthly repayment plan.
The CAB can also connect you with a counsellor. They’ll guide you through options like Individual Voluntary Agreements (IVA). They can also assist in negotiating with creditors to create an affordable and long-term payment schedule.
Some other debt charities that you can reach out to include:
- StepChange
- Citizens Advice
- National Debtline
Key Points
- The Centralised Attachment of Earnings Payment System is a government-operated system used for deducting debts directly from an individual’s wages.
- It is triggered by missed debt payments, particularly those under a County Court judgment (CCJ) or related to maintenance debts.
- It involves a court issuing an order, the employer being notified, and subsequent wage deductions.
- It is specifically focused on debts that are subject to a CCJ and unpaid maintenance obligations.
- The employer is responsible for deducting and remitting payments as per the CAPS order.
- Employees are not required to disclose the reasons for the debt to their employer.
- If there is a change in circumstances, such as when an employee changes jobs, the employer is responsible for informing the court.
- Seeking professional assistance and consultation with financial advisors for personal advice on handling CAPS is beneficial.
- Sources like the Citizens Advice Bureau provide guidance on managing debts and understanding CAPS.
