COVID-19: How to protect yourself from Sheriff Officers
COVID-19: How to protect yourself from Sheriff Officers
The Scottish Government has introduced emergency provisions to protect people from Sheriff Officers during the COVID-19 outbreak.
In its latest measure to protect Scots from the financial fallout of the pandemic, the government unveiled new laws as part of the Coronavirus (Scotland) Act 2020 on April 7 which protects people from action being taken by Sheriff Officers during the current crisis. They are also intended to prevent creditors from making someone bankrupt.
The measures, known as Statutory Moratoriums, are not new in Scotland, but whereas previously they only lasted for six weeks, they are now intended to last for up to six months.
What is a Statutory Moratorium?
A Statutory Moratorium is a legal device that it is free to apply for and does not require an application to be made to the courts, even though it protects people from court-approved debt recovery practices, known as diligence.
Once applied for, it protects people from any further action being taken by Sheriff Officers and from applications being made to the courts to make people bankrupt.
What this means in practice, is it protects people from:
- Legal demands for payment of money, known as Charge for Payments;
- Wage Arrestments;
- Bank Account Arrestments; and
- Attachments of property, that is kept both inside and outside the home.
To apply for a Statutory Moratorium, all you need to do is speak with a Carrington Dean money advisor, who can arrange to apply on your behalf.
Can a Statutory Moratorium freeze interest and charges?
Although Statutory Moratoriums protect people from action being taken by Sheriff Officers, they do not protect you from creditors who are still adding interest and charge to your debts. This means although you may be protected from your creditors whilst you are using a Statutory Moratorium, your debts can still increase.
For this reason, they are best used only as a temporary measure and should only be applied for whilst you are receiving advice from a money adviser.
The idea behind a Statutory Moratorium is it gives you “breathing space”, so you don’t have to panic. It can allow you time to decide how best to deal with your debts and to consider all your options.
The type of options they are designed to help people with are:
The Debt Arrangement Scheme (DAS)
A formal repayment plan that is governed by legislation.
The Debt Arrangement Scheme allows you to repay all your debts, with one affordable payment each month.
The DAS is not a form of personal insolvency, so you do have to repay the full amount owed, but all interest and charges are frozen.
Providing an application is made to the Debt Arrangement Scheme during the six months that a Statutory Moratorium is in place, the protection from Sheriff Officers continues until the application is decided.
Protected Trust Deeds
Statutory Moratoriums can also be applied for prior to applying for a Protected Trust Deed, which is another formal debt remedy in Scotland.
Protected Trust Deeds only require you to pay what you can afford for usually four to five years, with the remainder of your debts being written off after that period.
If you apply for a Protected Trust Deed whilst you are using the Statutory Moratorium, the protection it provides continues until your creditors have an opportunity to vote on your proposals, which means you remain protected the full time.
If during the period that a Moratorium applies, you apply for your own bankruptcy, then you are protected until it is awarded.
Frequently asked questions about Statutory Moratoriums
How many times can I apply for a Moratorium?
Previously, you were only able to apply for a Moratorium once in any 12-month period. The emergency legislation, introduced by the Scottish Government, has now removed this restriction, so you can apply for more than one.
Do Statutory Moratorium affect my Credit Rating?
Statutory Moratoriums, in themselves, do not affect your credit rating; however, as most people who apply for them already have missed payments to their debts, this will affect their credit rating.
Do people know that I have applied for a Statutory Moratorium?
Statutory Moratorium are registered on a public register, known as the Register of Insolvencies, although they are not a form of Insolvency.
The reason for this is so Sheriff Officers can search the Register, prior to carrying out enforcement action. Where your details are registered, they should not take any further action.
Where Sheriff Officers do act, despite the fact you have registered a Moratorium, then the action they have taken is incompetent and must be recalled immediately on the Sheriff Officer being notified. Any fees that have been charged, must also be refunded.
When do my details get removed from the Register of Insolvencies?
Your details should be removed once the six months have expired, providing you do not proceed with another debt solution.
If you want more information on applying for a Statutory Moratorium, speak with a Carrington Dean money advisor for free advice on 0808 253 3461
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