In light of the COVID-19 pandemic, the Scottish Government introduced two key Acts of Parliament, aimed at protecting members of society with unsustainable debt.
Within these acts, several key temporary changes were introduced that affect how debt solutions within Scotland function.
- extending the existing moratorium on diligence and bankruptcy from six weeks to six months, preventing creditors from taking action against individuals who have financial difficulties;
- removing restrictions on an individual benefiting from more than one moratorium in a 12-month period, ensuring applicants prior to the Act are not disadvantaged
- increasing the minimum amount someone must owe before a creditor, or group of creditors, can petition for their bankruptcy from £3,000 to £10,000;
- eliminating application fees for Individuals in receipt of certain benefits and a reduction in application fees for all other MAP and full administration bankruptcies to £50 and £150 respectively;
- Widening the criteria for accessing the Minimal Asset Process bankruptcy by increasing the maximum debt threshold from £17,000 to £25,000 and excluding student loan debt from that threshold;
- extending the period for trustees to seek a contribution order from 6 to 12 weeks after the award of sequestration, and
- improved the efficiency of the processes by allowing more electronic and virtual administration (for example, removing the need for wet signatures and allowing virtual meetings).
Provisions in both Acts allow the Scottish Parliament to extend any of these temporary provisions beyond the initial expiry date of 30 September 2020 to 31 March 2021. One further, final extension until 30 September 2021 is also possible if deemed necessary.
The Scottish Government has already confirmed that it will lay regulations in the coming weeks to extend provisions that are still deemed necessary, and expire those that are deemed no longer required.
In addition, the Scottish Government is required to keep the necessity of the emergency provisions under constant review, and to report every two months on their assessment of that necessity in view of the changing health and economic challenges of the COVID-19 pandemic.
AiB also have a dedicated business continuity page on our website that sets out measures introduced, releases and relevant guidance published during the COVID-19 pandemic.
Furthermore, AiB has prepared and submitted statistics that include analysis of the impact brought in by both the Coronavirus (Scotland) Act 2020 and the Coronavirus (Scotland) (No.2) Act 2020. The data shows activity levels since the introduction of new provisions on the statutory moratorium and the revised fee structures in place for accessing bankruptcy. This data included here is not part of the regular Scottish Statutory Debt Solutions Statistics releases and can be found in the ad hoc releases section.
However, AiB plans to include statistics on the statutory moratorium and awards of bankruptcy break down by whether a fee is payable or not in the next and subsequent Scottish Statutory Debt Solutions Statistics monthly publications. The release date of the next publication is Wednesday 14 October.
It is advisable to check our website regularly for any updates, or sign up here to register to be notified whenever we publish new information.