If you have failed to repay a debt, your creditor might take a court order out against you to take the money directly from your wages each month. This is known as an Attachment of Earnings.
Having money you owe taken directly from your wages before you have a chance to repay it in monthly instalments can come as a shock but being prepared can help you know exactly what to expect.
What is an Attachment of Earnings?
An Attachment of Earnings is a legal process where the court instructs your employer to make deductions from your wages each month to repay a debt.
Typically, an Attachments of Earnings Order is issued when a creditor has taken out a County Court Judgment (CCJ) for an unpaid debt but it has been unsuccessful in recovering the money owed.
Is an Attachment of Earnings the same as a Direct Earnings Attachment?
Although similar, an Attachment of Earnings is different from a Direct Earnings Attachment (DEA) in several ways.
For example, a DEA is usually only applied in the event of a benefit or tax credits overpayment and doesn’t require a court order. However, an Attachment of Earnings is usually reserved for Council Tax arrears or child maintenance arrears and requires a court order.
Why have I received an Attachment of Earnings?
If you have received an Attachment of Earnings, it usually means you have an outstanding Council Tax bill and your local authority has sought legal action to recover the money they are owed.
However, receiving an Attachment of Earnings should never come as a shock as it can only be issued if you have failed to repay a County Court Judgment (CCJ) for the same debt.
Put simply, this means you have failed to repay a debt, had a CCJ issued against you, and failed to repay the CCJ, leaving the creditor with no choice but to take out an Attachment of Earnings against you.
How does an Attachment of Earnings work?
An Attachment of Earnings works by taking money directly from your wages each month to be put towards your unpaid debt until it is repaid.
If a creditor wants to apply for an Attachment of Earnings against you, they must fill in Form N337 and send it to the County Court Money Claims Centre (CCMCC).
The court will then have your employer deduct payments from your wages and send the money directly to the court who will then forward the monthly payment to the creditor that applied for the order in the first place.
The monthly payments will be taken from your wages in a similar way to other deductions such as income tax, pension contributions, and National Insurance contributions.
The amount deducted will be listed alongside these deductions on your wage slip so you know exactly how much has been taken.
What is an N55 form?
You will be notified of an Attachment of Earnings through a notice of application (N55 form).
This form will include information about the debt as well as your application number which must be quoted on all future correspondence.
The N55 form will come enclosed with a statement of means (N56 form) form which must be completed and returned within eight days alongside your most recent wage slip.
The N56 form should include information about your finances to allow the court to decide on a suitable amount to deduct each month.
Failure to respond to the N56 form is considered an offence and enforcement officers will serve an order to complete the form.
If you still don’t respond, you will be summoned to attend a court hearing and could face imprisonment.
How much will be taken from my wages?
The court will assess your financial situation and make a decision based on how much you can afford to repay.
Rates are worked out as a percentage and are based on how much you are paid each month.
For example, if your net monthly income is between £300 and £550, 3% will be deducted. If your net monthly income is over £2,020, 50% will be deducted.
You will be assigned a protected earnings rate which is a minimum amount that must be paid to you each month after deductions.
Your employer may also deduct £1 to cover administration costs.
It is also worth remembering that multiple Attachment of Earnings Orders can be applied to your wages at the same time as long as the total amount deducted doesn’t exceed the total protected earnings rate.
If you have another CCJ alongside the Attachment of Earnings, you can apply to combine both payments into one monthly payment in what is known as a Consolidated Attachment of Earnings Order. Your creditors will then have 14 days to reject your request.
What earnings can be included in an Attachment of Earnings?
The following earnings can be included in an Attachment of Earnings:
- Income (including bonuses and overtime)
- Fees and commission
- Statutory Sick Pay
- Contractual Maternity Pay
What earnings can’t be included in an Attachment of Earnings?
The following earnings can’t be included in an Attachment of Earnings:
- Statutory Maternity Pay
- Statutory Paternity Pay
- Statutory Adoption Pay
- Shared Parental Pay
- Disability pension
- Tax credits
- Guaranteed Minimum Pension
Can I stop an Attachment of Earnings?
If you believe an Attachment of Earnings will cause you further financial hardship, you can ask for it to be suspended by ticking a box on the N56 form.
This is known as a Suspended Attachment of Earnings Order.
If the court agrees with you, the Attachment of Earnings will be suspended and you can repay the debt in monthly instalments to your creditor instead of the court.
If you agree to owing the debt but think too much money is being deducted, you must let the court know within 14 days of the order being made.
They will then arrange for a court hearing to allow you to argue your case which will require court fees.