If you finding it difficult to repay one or more of your creditors, and need more time to consider your options without the threat of legal action, you can now apply to the Accountant in Bankruptcy (AiB) for what is known as a moratorium on creditor diligence.
This effectively stops creditor action against you for six weeks, offering valuable time to seek advice and think about your options. Moratorium protection was introduced as part of the Bankruptcy and Debt Advice (Scotland) Act, 2014, and is intended to help individuals escape the debt cycle.
You are allowed to apply for a moratorium once in any 12-month period. This is to prevent potential abuse of the system by repeatedly applying for more time to pay, so if you’ve already applied during the last year you won’t be eligible.
Moratorium on diligence is used alongside the statutory Scottish debt solutions, and may be available if you are considering an application for your own sequestration, a Trust Deed, or for the Debt Arrangement Scheme.
Form 29 ‘Moratorium – Notice of Intention to Apply’ should be completed with your personal details, indicating which one of the three debt solutions you are considering.
You’ll also need to confirm that this is the only application you’ve made within the last 12 months before signing the form. It should be emailed or posted to the Accountant in Bankruptcy.
You’ll receive confirmation of receipt from AiB, and they’ll let you know in due course whether or not the moratorium has been granted. If you’re successful, the six week period commences when the Accountant in Bankruptcy records your application on the Register of Insolvencies and the DAS Register.
If the application is successful, your creditor(s) will not be able to serve a charge for payment during the six week period, or enforce any court orders. It gives you a much-needed breathing space to focus on the next step without the threat of legal action hanging over you, and with professional advice and support from a money advisor, it can make a huge difference to your ability to escape debt.
It must be noted, however, that any diligence measures already in existence before the moratorium starts, including attachments and earnings arrestment, remain in force.
A money advisor will be able to tell you which of the three debt relief options is the most suitable for you, after having assessed your circumstances and ability to repay. It may be that sequestration is your only option if you are unable to repay any money at all, or a Trust Deed could be a better choice if affordable repayments can be negotiated.
If you apply for moratorium protection for either of these options, the Accountant in Bankruptcy will record your intention on the Register of Insolvencies. The Debt Arrangement Scheme has its own register on which your intention is noted, if you’re eligible to apply for a debt payment plan.
Interest and charges on your debt are frozen once the moratorium period begins, but will be added back if you change your mind and choose not to enter into a Trust Deed, or continue with an application for a debt payment plan.
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