On two occasions in the last month clients have instructed us to stop a bank short circuiting the court process.
Normally when you say somebody owes you money, and they say they don’t, you raise an action and let the courts decide who is right. However, in two recent cases, banks have tried to short circuit this process when trying to enforce personal guarantees against our clients.
They do this by adding a clause to the end of the guarantee allowing them to register the guaranteed in the “Books of Council and Session for preservation and execution”. This sounds quite innocent, but it isn’t. What it allows the bank to do is move immediately to enforcing payment, without first obtaining a court judgement. In these two cases the banks served a “charge for payment”, which is an official demand for payment within 14 days. If the alleged debtor does not pay within 14 days, the bank can bankrupt them.
In certain circumstances this is perfectly legal. However, when the debt is disputed, it puts immense pressure on the person disputing the debt.
What you can’t do is ignore it. You need to raise an action to suspend the charge, and stop any other enforcement action until the case is properly resolved. If you fail to do so then you might lose your opportunity to contest the debt.
In both cases we managed to persuade the court to suspend the charge. The banks involved are now arguing their cases before a judge as it should be.
Has this happened to you? Let me know.
For further information please contact David Calder on 0131 226 8215.