13/05/2020

New bill to provide welcome support for Scots facing debt

13/05/2020

New bill to provide welcome support for Scots facing debt

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A new bill has been proposed by the Scottish government that would bring further protection for those struggling with debt during the coronavirus pandemic.

If MSPs vote to pass the second Coronavirus Scotland Bill, it will increase the minimum level of debt that an individual must be in before they can be made bankrupt, to £10,000.

Currently, those who are in debt by over £3,000 can be forced into bankruptcy by their creditor. These temporary changes would increase this level to provide for those who are struggling with unprecedented debt during the current crisis and help more people avoid both the costs and stress of bankruptcy proceedings at this difficult time.

The upper limit for the minimal asset process (MAP) for bankruptcy will increase too, from £17,000 to £25,000. MAP bankruptcy is currently only available in Scotland, and usually applies to those who are on a low income with minimal personal assets of between £1,000 and £17,000. By increasing this upper limit, the new Bill will provide for more people who are in debt due to the pandemic.

The bill also recommends reducing the fee for applying for bankruptcy, from £90 to £50 for MAP bankruptcy, and from £200 to £150 for standard bankruptcy, as well as allowing creditors to meet electronically.

When will the bill be passed?

Stage one of the bill has already been considered by the Covid-19 committee yesterday morning, with evidence taken from Cabinet Secretary Michael Russell and the Law Society of Scotland.

MSPs have been asked to approve the bill being treated as emergency legislation. A stage one debate is expected today, Wednesday 13 May, with stages two and three to follow next week.

Russell said: “The Scottish Government is determined to do all we can to help individuals and businesses who are facing hardship as a result of this unprecedented crisis.

“The bill will help many people facing bankruptcy, adding to emergency measures which the Scottish Parliament has already approved.

“It will also provide Scottish ministers with the power to introduce reductions in non-domestic rates payable during 2020-21, and a wide range of changes necessary to support public services to continue to operate as they were intended during what are exceptional circumstances.

“Throughout this crisis, we have tried to achieve consensus and will continue to work on a cross-party basis to enable the government to take the steps necessary to help Scotland get through these extraordinary times.”

What other laws will change?

The bill proposes some significant changes to public services, as well as businesses and individuals, to help the government as well as key health and social care services to respond to the pandemic.

Some of the other key elements of the Coronavirus (Scotland) (No.2) Bill currently include:

  • A proposal to invest an additional £19.2 million in Carer’s Allowance Supplement (CAS), in order to provide an additional payment of £230.10 for the months from April to September 2020 for eligible carers.
  • Introducing a 7-day notice-to-leave period for students who currently live in purpose-built student accommodation and are tied into existing contracts, as well as a 28-day notice-to-leave period for those who are hoping to enter into new contracts for the coming academic year in halls of residence. This will mean students aren’t held financially liable for accommodation payments when they may not use it for their full contract duration.
  • Non-domestic rates (business rates) relief
  • Changes to the proceeds of crime and the operation of Scotland’s criminal justice system.

What was included in the first Coronavirus Scotland bill?

The first Coronavirus Scotland Bill, now the Coronavirus (Scotland) Act 2020 was unanimously passed by the Scottish parliament and completed all stages of the legislative process on 1 April 2020. The Act includes a number of temporary extra powers and measures to help sustain public services throughout the Covid-19 crisis in Scotland. It includes the following measures to support those struggling financially:

  • Prevention of evictions – With new temporary powers to extend the notice periods for all evictions with a few limited exceptions, for either three or six months.
  • Protection for those in debt – The Act introduced a moratorium of six months to give people breathing space from their debtors in order to think through their options. It also allowed the number of moratoriums an individual is allowed on their debt to unlimited. Formerly, only one moratorium was allowed in a 12-month period.
  • Protection for commercial tenants – The Act also protects those who may rent commercial properties, extending the eviction period from 14 days to 14 weeks. It also gives Scottish ministers the power to extend this period if necessary.

All of the above temporary measures set out in the Coronavirus (Scotland) Act are set to expire on 30 September and are strictly limited to the duration of the coronavirus outbreak. However, the legislation can be extended for two further six-month periods if deemed necessary, meaning the maximum period this legislation can apply is 18 months.

If debt is casting a shadow over your life, don’t put off doing something about it. Call us and speak to one of the Carrington Dean debt specialists on 0808 2234 102. We can talk you through the options available to you for dealing with your debt, and help you put a plan in place.

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