The majority of the measures introduced seek to provide additional support for the people of Scotland to help cope with the impact of the COVID-19 pandemic in the months ahead. These will expire automatically after six months but may be extended for two further six month periods, giving a maximum duration of 18 months. The Act also gives the Government authority to end some (or all) of the powers at any point should they no longer be required.
Changes to AiB Process
The revised moratorium provisions provide protection from creditor debt enforcement action for a period of six months. The rule that currently restricts moratorium applications to one per year has also been rescinded. Moratorium applications can be submitted electronically here.
The moratorium is available to individuals, or certain legal persons who are permitted to apply for sequestration under the terms of the Bankruptcy (Scotland) 2016 Act:
(a) a trust in respect of debts incurred by it;
(b) a partnership (including a dissolved partnership);
(c) a body corporate;
(d) an unincorporated body; and
(e) a limited partnership (including a dissolved limited partnership) within the meaning of the Limited Partnerships Act 1907, or jointly by, as the case may be, the trustees, partners or members of any of those persons
Applications can be submitted directly by those seeking protection, though it would be best to seek money advice before taking this action. Free advice can be obtained from a variety of sources including Citizens Advice Bureaux, Local Authority Money Advice Units and debt advice charities.
The purpose of the extended moratorium is to:
reduce stress and protect the mental health of those worried about the prospect of creditor enforcement action during a time of increased uncertainty;
give additional time for options to be considered properly before potentially irreversible decisions are taken, particularly as advisers may find it difficult to see the volume of clients that need help; and
protect individuals whose problem debt is a direct result of COVID-19, and whose finances will normalise after the pandemic without the need for a formal debt solution.
It is important that only those who need protection should apply. When a moratorium is approved, the applicant’s details are published on the public Register of Insolvencies.
This is a serious step that should only be taken where necessary and could affect credit scores. Usage will be monitored closely and credit checks may be performed on applications. If evidence suggests the moratorium is being used inappropriately, the provision made in the Act to extend the duration of moratoria may be revoked.
The Bill also introduced provisions on the use of electronic signatures. These will allow AiB to accept debtor bankruptcy application forms submitted with electronic signatures. Please note that the signature has to be created by the individual – this can be done through use of various software solutions or simply by the applicant emailing their money adviser / trustee with a simple statement averring that the relevant form is being submitted electronically with their consent. The statement must include the applicant’s name, address and date of birth. This should be uploaded to our BASYS case management system along with the relevant form(s).
If you require any more information in the meantime, please send an email to this address: - firstname.lastname@example.org. AiB has a dedicated page on our website specific to emergency protocols and updates during the COVID-19 pandemic. 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.