In response to the financial pressure that many are experiencing as a result of coronavirus, a new Bill was introduced by the Scottish Parliament last week. This Bill (Coronavirus (Scotland) (No 2) Bill) will complement the initial legislation introduced last month, and includes a series of changes to the bankruptcy process in Scotland that would help to reduce the financial impact for people in debt.

These new measures include increasing the minimum debt threshold for a creditor petition from £3,000 to £10,000 and increasing the maximum level of debt in MAP (Minimal Asset Process) bankruptcies from £17,000 to £25,000 (excluding student loans).

Two additional amendments have also been proposed by Jackie Baillie MSP. The first would amend the Bankruptcy (Scotland) 2016 Act to introduce a 6-month moratorium (which as well as protecting people from recovery action) would see a freeze in fees and charges on debts. The financial impact of COVID-19 will undoubtedly continue long after the public health emergency eases, and a 6-month freeze on fees and charges would provide breathing space to those experiencing financial difficulty.

The second amendment proposed by Jackie Ballie is to waive all application fees for bankruptcy applications.

Commenting on the Bill and proposed amendments, Money Advice Scotland’s CEO Yvonne MacDermid said:

“The developments brought forward by the Scottish Government within the Coronavirus (Scotland) (No 2) Bill will bring much-needed protection for people in debt. 

“We also support the amendments proposed by Jackie Baillie MSP. Research shows that the fees payable at the outset of bankruptcy can prevent people from accessing much needed debt relief.

“Freezing interest and charges during the six-month moratorium would also provide enhanced breathing space for people who are currently struggling to keep up with repayments.”

“These changes would have a profoundly positive impact during a period of unprecedented strain on personal finances.”

The Bill is being expedited through the Scottish Parliament and if approved, is expected to pass in the next few weeks. Once passed, Scottish Ministers will review and report on the new measures every two months.