I lost my job as a result of Covid-19 and can’t afford my bills

The economic impact of coronavirus continues to cause serious financial difficulty for people in Scotland, creating rising debt levels and severe uncertainty for the future. Loss of jobs and reduced incomes create a seemingly impossible situation, but there are specific actions you can take to regain control and become debt-free.

So what can you do if you’ve lost your job as a result of Covid-19 and can’t afford to pay your bills?

New statutory moratorium on debt enforcement

The Scottish government has introduced a statutory moratorium of six months in response to the adverse effects of coronavirus on people’s livelihoods. This means you now have six months without pressure from creditors, to consider your next steps.

Creditors are unable to force you into bankruptcy during this time, so what options might be available to help you deal with your existing debt, and prevent further financial decline in these extremely challenging times?

Official debt help if you’ve lost your job and can’t pay your bills

Scottish Trust Deed

If you can’t see a way out of your current financial situation, entering a Scottish Trust Deed will support you in becoming debt-free. It’s an arrangement between you and your creditors to repay an agreed proportion of the money you owe.

Trust Deeds are typically in place for four years - they help you regain control of your finances without being forced into bankruptcy (sequestration). You may be eligible if you have debts of £5,000 or more.

Sequestration

This is the Scottish term for bankruptcy - if you can’t afford to pay your bills your creditors may ultimately seek to force you into sequestration if you owe more than £10,000. You can also declare yourself bankrupt, and in Scotland there are two types of bankruptcy:

–      Minimal Asset Process (MAP): if you owe between £1,500 and £25,000 (the upper threshold was increased by the Scottish government to help people access MAP during Covid-19), no income, and minimal assets, MAP offers a shorter period of six months in bankruptcy

–       Standard sequestration: you can enter the ‘standard’ sequestration process if you owe £3,000 or more and aren’t eligible for the Minimal Asset Process. In this case, the bankruptcy period is typically 12 months.

The Debt Arrangement Scheme is another debt remedy in Scotland - it protects you from creditors whilst you pay off your debts in full. Additional interest and charges are frozen and written off at the end, but due to your job loss it may not be suitable as it relies on a regular monthly income. DAS would be worth considering if you find a new job, however, as it means you don’t have to declare full insolvency.  

Seeking professional support

Obtaining professional support when you’re out of work and can’t pay your bills ensures you make the right decisions and understand all your options. In fact, the debt procedures in Scotland dictate that you must obtain professional advice before proceeding.

It may also be possible for a money advisor or licensed insolvency practitioner (IP) to negotiate informally with your creditors on your behalf, which depending on your circumstances, could be all you need to regain control of your financial situation.

If not, having access to this type of specialist knowledge and unbiased guidance is invaluable.

Scotland Debt Solutions are debt specialists and will help you deal with this extremely worrying situation. We’ll guide you carefully through your options, and provide independent advice on your next steps. Please contact one of our expert team to arrange a free same-day consultation – we operate from a network of offices around Scotland.