The Coronavirus (Scotland) Bill 2020 was introduced in April to help people in Scotland deal with the devastating effects of coronavirus, bringing in new measures to provide financial support at this challenging time.
Overdraft debt is one area of significant concern, whether it’s an existing arrangement or you’ve had to set up a new overdraft facility simply to get by. The measures are initially in place for six months, but provision has been made for SMPs to vote to extend it for a further six months, and then again for another six months if necessary.
Nobody knows when the crisis will end or how quickly we can regain control, so how does the new legislation protect bank customers with overdraft debt and how can you access this support?
The banks are offering interest free overdrafts up to a limit of £500 to customers experiencing financial difficulties as a result of coronavirus. The key issue in being eligible for this help is whether your financial difficulties were caused by the pandemic, or you were already in overdraft debt when the crisis started.
If you were in overdraft debt before COVID-19 you may still be able to obtain support from your bank, but it may not be in the form of an interest free overdraft facility. In general, however, the banks are expected to be more empathetic and supportive whilst this crisis lasts.
Your bank may suggest others ways to deal with your debt if you exceeded your overdraft limit before coronavirus, or went into an unarranged overdraft. Some banks are offering a lower interest rate on all overdraft facilities whether arranged or unarranged, for example, as well as no overdraft fees or charges.
These measures of support are intended to help people in Scotland in the short-term, so a spiral into unmanageable debt is avoided. It’s vital to get in touch with your bank as soon as possible, however, if you’re experiencing financial problems.
Banks may vary slightly in their support regarding overdraft debt, and the help you receive may depend on your individual financial circumstances. In general:
You’ll need to seek professional advice on these debt processes, however, to ensure they’re right for you. Our team of licensed insolvency practitioners at Scotland Debt Solutions can advise on the best way to deal with overdraft debt, and how to become completely debt free over time. Please contact one of the team to arrange a free same-day consultation.
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