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Attachment Of Earnings Order (AEO)
What is an attachment of Earnings?
An Attachment of Earnings Order (AEO) is where a creditor applies to the court for an order to allow them to take funds direct from your wages, if you fail to keep up repayments on a debt. The type of debt you might have where your creditor applies for an AEO include:
- Rent or mortgage arrears
- Income tax, VAT or TV licence arrears
- Credit debts, e.g. credit cards and bank loans
- Student loans
If you have been issued with an AEO and need to know how it works, if it will affect your job and the amount you would need to pay, read our guide and get in touch for free debt advice from PayPlan if you need further help.
How does an Attachment of Earnings work?
If the creditor has issued you a County Court Judgment (CCJ) and you have fallen behind with at least one payment, and you owe more than £50, a creditor is within their rights to apply to the court for an Attachment of Earnings.
This is where monies will be taken directly from your wages. The order however cannot be applied for if the debtor is:
- In the army, navy or air force
- A merchant seaman
What happens with an Attachment of Earnings?
Once your creditor applies to the court for an AEO you will be sent an N56 form. You must fill out this form and return it within eight days, along with a copy of your most recent wage slip.
You will need to fill out details about your employment and financial circumstances, including income and expenditure.
Opportunity to make an offer of payment
The court will ask you to pay the amount owed in full. If you cannot afford this, you will need to fill in the form saying as much and send it back to the court. If you have received a N56 form, you MUST fill this in and return it as soon as possible.
When you fill out the form you can make an offer of payment to prevent the application of an AEO. If this is accepted, you make the agreed payments to your creditors and your employer is not notified. Deductions will be made at the rate of payment decided by the court as reasonable.
What if my offer of payment is rejected?
If your offer of payment in the N56 form is rejected the AEO may be applied, and this decision is down to the court. The court will contact your employer to arrange the payments. These will be taken directly from your salary each time you are paid.
Your employer must by law deduct the monies from your wages and make payments to the creditor up until the time the debt is paid off, at which point you will resume receiving your full wage.
There may be a £1 administration fee on top of each payment, as your employer is entitled to charge this, however it isn’t mandatory.
What are the consequences if I fail to return the form?
Failure to return the form will result in the court sending a County Court bailiff to issue the form by hand. If you fail to return the form after that and the court believes you have received the form, a warrant of arrest could be issued against you.
A bailiff will be sent to collect you and may take you to the court to fill in the form or explain why you have not provided the information asked of you.
You must attend this hearing. If you don’t the court can issue a warrant for your arrest and attendance at court, or they can even send you to prison for up to 14 days.
If you are worried about what will happen if you fail to return the form, or if you have debts you cannot manage, get in touch with PayPlan for free advice.
How much will I pay?
The offer will take into consideration how much you need to live on i.e. food, rent/mortgage, essentials and bills. If you are a low wage earner, it might be that an AEO is rejected.
Once you have paid the debt in full you can ask for the attachment to be suspended.
What if I can’t afford the payments?
If you think too much money would be taken from your wages, you can inform the court that you disagree with the amount asked for by the creditor. You can do this within 14 days of the order being made. A hearing will be set and a judge may decide to make a different order.
If the order has been in place for more than this time and your circumstances have changed, you can apply to the court to amend the terms of the order. This might be the case if your wages have gone down or if your outgoings have increased.
Consolidated Attachment of Earnings Order
If you have other County Court Judgements as well as the AEO and you want to have one monthly payment taken from your wages by your employer, instead of having to pay different creditors, you can ask the court to give you a consolidated AEO.
If granted, the court will divide the money up from your wages and give this to the relevant people with CCJs against you. This may be a beneficial option if:
- You already have an AEO.
- You are okay with money being taken from your wages.
To apply for a consolidated AEO you need to write to the court and include in the letter:
- Details about the AEO and CCJ(s) you want to consolidate.
- A budget sheet with details about your income and outgoings, making clear how much you can afford to pay in the new order.
There will be no hearing and there is a timeframe of 14 days for your creditors to object to the new order. The option to consolidate the orders is usually granted, and details of the new order will be sent across to you once agreed.
Can creditors go directly to my employer?
If a creditor knows your employer’s contact information, which they may do from previous financial details given to them, this information can be given straight to the court.
The court can then go to your employer and ask for details of your earnings in cases where you don’t return the N56 form to the court.
In some cases, your creditor can apply to the court for an order to obtain details about your finances or to get your employer’s details.
You will have to go to court and swear an oath that the financial information you are giving is accurate.
Can I lose my job if I receive an AEO?
This can be a serious situation in some jobs and there may be grounds for dismissal or disciplinary action, if your employer finds out you have an AEO.
You should check your contract of employment if you receive an N56 form. This is particularly the case in jobs that demand a lot of trust and where an employer may have a policy for dismissing employees who have a court order made against them. For example:
- If you work with money
- Security jobs
If you’re worried about dismissal due to an AEO or need help getting out of debt, contact PayPlan for free debt advice.
What if I don’t want my employer to be contacted?
You can ask for the AEO not to be granted by filling out the N56 form and you would explain the reason for not wanting this is because you would lose your job, and it will then be up to the court to decide what to do.
If they decide not to enforce the AEO you will receive a Suspended Attachment of Earnings and will need to come to a new agreement with your creditor to pay them directly.
If you fail to make these payments, the creditor will request a re-issue of the Attachment of Earnings and the order will be sent direct to your employer without any further notification to you.
What happens if I change jobs?
If you change employer then the AEO will need to be transferred over to your new employer straight away. It is your responsibility to ensure that this happens and it is an offence not to do this.
For immediate and free debt advice please call PayPlan free on 0800 280 2816 or use our Debt Help Form to submit your debt problem online.