The Bankruptcy and Diligence (Scotland) Bill, passed on 6th June 2024, is an Act of the Scottish Parliament which has significantly modified the Bankruptcy (Scotland) Act 2016 to establish a mental health Moratorium. This Bill addresses debt recovery action by creditors against individuals who have a mental health illness. Debt recovery is the process of making companies or individuals pay money that they owe to other companies or individuals. A creditor is the term used to describe an entity that is owed money (this can be an individual, organisation or government body). A debtor is the term used to describe the individual that owes the money. Recovering outstanding debt can be a complex process for creditors and a daunting experience for debtors. This Bill seeks to address that.
This Bill introduces protections for individuals who are facing mental health issues and are in debt. Such protections include a pause on debt enforcement action, until 6 months after the individual has completed treatment. Individuals will be eligible to apply for the moratorium if a mental health professional finds that the individuals’ mental health struggles are related to their debt or is adversely affecting their recovery. Individuals may also be eligible to apply for the moratorium if they are in receipt of crisis mental health care. This Bill addresses one of the most significant stress triggers, money, with 39% of people in the UK in 2024 attributing their state of worry or pressure to money.
The purpose of this measure is to provide the individual with adequate breathing space, providing them with a period whereby creditors cannot contact them. This Bill takes a collaborative approach which prioritises mental health recovery over debt recovery, promoting the completion of mental health treatments. This Bill includes a review of the mental health moratorium. This provision means that the Scottish Ministers must undertake a review on the operation of the moratorium established and prepare a report enclosing the findings of that review. The review period has been set at 5 years from the day on which the first regulations under ‘Moratorium on debt recovery action: debtors who have a mental illness’ come into force. Such review will encourage consistent checks on whether the provisions fulfil their intended purpose. This bill demonstrates the amalgamation of those who understand mental illness and those who understand debt to offer support to individuals who are facing both difficulties.
Once the measures proposed within the Bill come into force, they will alter the powers of debt recovery. However, our dedicated team of litigation specialists are well prepared to skillfully handle a wide range of disputes through expert negotiation and clear, personalised advice tailored to your unique circumstances. In cases where court intervention is necessary, we take a proactive and resolute approach, ensuring fast and effective solutions. We understand that litigation can be a daunting process, so we go the extra mile to simplify the process and guide you through each step in easy-to-understand language. We invite you to reach out to us today on 0141 221 1919.
