If you are worried that you may be at risk of Sheriff Officers taking action against you, a Statutory Moratorium is a legal device that you can use to protect yourself.
Statutory Moratoriums also protect you from Creditors making an application for you to be made bankrupt.
Previously, Statutory Moratoriums only gave you six weeks protection from a Sheriff Officer taking action against you, like Arresting your Bank Account or Freezing your wages. However, in response to the Covid 19 crisis, the Scottish Parliament has passed emergency legislation that extends that protection to six months now.
If you are, therefore, worried a Sheriff Officer may freeze your bank accounts, or arrest your wages a Statutory Moratorium may be suitable for you.
It can also stops items like cars, or any other item, being attached.
The process is designed to allow breathing space for anyone struggling with their debts, so they can consider their options, regardless of whether those options are the Debt Arrangement Scheme, a Trust Deed or Bankruptcy (Sequestration).
During the Covid 19 crisis, they can also be used to buy you time, until the crisis is over, so you can review your options when you have more information.
Who can use a Statutory Moratorium?
Statutory Moratoriums can be used by anyone who is normally resident in Scotland.
However, you can only use one in any 12-month rolling period.
The process for applying is free and it will not affect your credit rating, although if you miss payments to debts where the creditors normally report missed payments to Credit Reference Agencies, it may damage your credit rating.
It is, however, advisable that you seek advice first, as to be most effective the procedure should only be used when it is necessary.
If it is used too soon or when there is no risk of legal recovery action being taken, then it may be pointless.
Also if you have been maintaining your payments to your agreements and are unable to make payments to them because of the Covid 19 crisis, it may be better for you to apply to your creditors for a payment break. They may not stop interest and charges being applied to your debts, but they won’t report the payments as being missed to credit reference agencies.
It is worth noting that Statutory Moratoriums do not stop a creditor applying interest, charges or fees to your debts, so the amount owed can increase whilst you are in one.
For that reason, if you can agree a payment break with your creditors, this may be better.
Also Statutory Moratoriums do not stop prevent creditos raising a court action to obtain a decree (court order) against the you. It just stops them doing anything with it during the six month period.
The best time to use a Statutory Moratorium, therefore, is when a creditor already has a court order or a Summary Warrant and can act.
Statutory Moratoriums and Bankruptcy
If a creditor raises an action to make you bankrupt through the courts, before a Statutory Moratorium has been used, applying for one at that point is too late. It only stops them raising the Bankruptcy Petition if you apply for the Statutory Moratorium before they do so.
That’s is not to say the bankruptcy cannot be avoided, but it will be necessary for you, or a representative, if you can get one, to appear at the hearing and explain what it is your are proposing to do, such as applying to the Debt Arrangement Scheme, which can stop a bankruptcy being awarded.
How do you apply for a Statutory Moratorium?
The process for applying for a Statutory Moratorium is relatively simple.
You can apply online (and please note although the online gives you the option of uploading a Form 33 (see below), this is not necessary at present, and completing the Online Form in itself is sufficient.
You can also apply by email of by post. You can do this by completing a Form 33 and returning it to the Accountant in Bankruptcy, at moratorium@aib.gov.uk or by post to:
Moratorium Application
IRT
Accountant in Bankruptcy
1 Pennyburn Road
KILWINNING
KA13 6SA
What Happens Next?
Where it is emailed to the Accountant in Bankruptcy, it is normally picked up that day and your are added to the Register of Insolvencies.
Sheriff Officers should search the Register before they take any action to ensure the person that has applied is not on it. If they are, they should not take any further action until the Moratorium expires.
However, in practice, they don’t always do this, and Charge for Payments get served and bank accounts get arrested. However, where something does happen, an extract from the Register can be sent to the Sheriff Officer to show their actions were incompetent and they then must reverse their action as quickly as possible. They should also remove any fees that were applied to your debts.
The Register of Insolvencies
The Register of Insolvencies is a public register, and anyone can access it online.
However, to find someone, you need to know their name, address, and date of birth, so it is not easy to trawl and find people. The reason it is public, is so creditors and Sheriff Officers can search it before taking action.
The information stored on it is only publicly available for 6 months and is then removed.
Can the Moratorium Period be Extended?
Once the six-months are up you lose your protection.
You cannot then use a Statutory Moratorium for another 6 months, so you will again become unprotected. This is why it is best to speak to us about finding a long term solution.
If it is appropriate to make an application to the Debt Arrangement Scheme (DAS), or grant a Trust Deed or apply for bankruptcy, this should be done within the protection period. The Moratorium period is then extended until the DAS application is decided, or the Trust Deed is protected or rejected, or the bankruptcy application is decided.
Statutory Moratoriums should only be used as a temporary measure when you are facing action from Sheriff Officers or Creditors are threatening to make you bankrupt.
During a Statutory Moratorium, your debts can increase and your credit rating can be damaged if you don’t pay your debts.
I have received a letter from HMRC regarding simple assessment saying i owe them 1200 pounds. The date in question is period ending 5. 4. 2020. I was employed at this time so why has this happened surely my employer would have made sure i was paying the correct tax. I am on universal credit as unemployed at the moment so will they accept a repayment plan as not sure how i can afford to pay this back.
Hi Anna
I am not sure why you have received a tax bill for that period. It could be a number of reasons, so it is best to contact HMRC and ask them why they believe you owe them money. They should be able to explain and possibly arrange repayment plan for you.
I have already received a “Charge for Payment” and now been advised that the company are seeking to carry out an “Attachment”. Is it too late to use a “Moratorium”?
Hi Charles.
It is not too late, providing the Moratorium is registered before the attachment is executed. If you want to chat to us about this, you can do so via our online chat.
Hi, I have still been contacted about my debt after I informed the company of my moratorium. What happens in this instance? Thanks
Hi Ian
When you say contacted, can I clarify what you mean. A Statutory Moratorium does not stop creditors contacting you, and under the Consumer Credit Act 1974, they are legally required to, to serve Notices of Default and Arrears. What a Moratorium stops is Sheriff Officers executing things like Wage arrestments and Bank account arrestments, or creditors trying to petition the courts for your bankrutpcy. That is all.
Does a statutory moratorium mean my car can’t be taken by a finance company while I get space to clear the remaining year of my contract?
Hi Stephen
A Statutory Moratorium will not protect your car if it is financed by a Hire Purchase, Conditional Sale or PCP Agreement.
You are best looking at a Time Order if they take Court action with a view to repossessing it.
Better still speak to the lender and ask if they can arrange a payment break or some other support.
Statutory Moratoriums only protect a car if you own it and Sheriff Officers are talking about attaching it.
Hi I will be going ahead with the statutory moratorium as I have other debts not at this stage yet.What should my response be to the court regarding the time to pay as it has to be returned in 21 days as I’m sure you know,many thanks for your reply and any other advice you could offer.
Hi John
You don’t need to do anything, if it is not a rent arrears or a car repossession case. If all they are doing is requesting you pay money and not asking for the return of something, or for you to move out your home, a Court Order will be granted in your absence.
After 14 days the Court Order is extracted, which means it can then be given to a Sheriff Officer to enforce using Diligence.
If the Moratorium is registered at that point nothing can be done as long as the Moratorium is active. At present Moratoriums last 6 months, because of Covid 19. Normally they only last 42 days. However, if they are registered before the 31st March it is 6 months.
My understanding is the Scottish Government will extend the 6 months protection for Moratoriums registered after the 31st March 2021. They will revert eventually back to 42 days, its just not possible to say when this will occur.
The only advice I would give at present, not knowing your personal details is contact your local advice agency, sooner than later.
Hi A court has sent me time to pay documents can I apply for a statutory moratorium
Hi John
You can apply for a Statutory Moratorium, but it is not a long term solution. Clearly someone has taken court action against you in their first steps to recover a debt.
One option, if you are not going to defend the debt, but need time to pay it off is to apply for a Time to Pay Direction. However, you should note that interest is still charged at usually 8% per annum and if you miss 3 payments, the right to pay by instalments is lost.
Also Time to Pays have to be agreed by the Creditor or the Sheriff and generally as a rule of thumb, when Sheriff’s are allowing Time to Pays, they are looking for the debt to be repaid within 12-24 months.
Time to Pay Direction are also not suitable for all types of debts, such as Car Finance Agreements or Rent Arrears, and usually specialist advice should be sought.
Also where you have multiple debt, you are often better speaking to an adviser about the Debt Arrangement Scheme.
A Statutory Moratorium can be applied for if you cannot afford to repay this debt at this time and it will protect you from Sheriff Officers for 6 months. It won’t, however, stop the Creditor getting the Court Order against you. There will come a day when the Moratorium will lapse and they will be able to use that decree to take enforcement action against.
A Moratorium now is a good idea if you cannot pay and need time to seek advice from your local advice agency.
Creditor has petitioned for my sequestration, will a moratorium help me with time to pay.
Hi Justin
No as a Statutory Moratorium only prevents a petition being raised. If it has already been raised it is too late to stop it.
However, it is not too late to apply for a Debt Payment Programme under the Debt Arrangement Scheme, which if awarded will stop the Sequestration being awarded.
Most Sheriff’s will continue a Sequestration hearing to allow an application to the Debt Arrangement Scheme to be decided, but it is at their discretion, so I wouldn’t delay. I would contact an adviser to discuss making an application and I would ensure you inform the Court that you want to appear or be represented at the hearing to ask the case is continued to allow your application to be heard. If you do nothing the bankruptcy will be awarded.
Can i apply for this if I am already in a trust deed?
Hi Leann
If you are in a Trust Deed and are considering applying for a Statutory Moratorium, I am assuming you have accrued some further debt since going into your Trust Deed.
I would always recommend in such a situation that you speak with your Trustee. A Moratorium is a temporary solution, as you consider your options and not a solution on its own. You should, therefore, speak with your Trustee. It maybe that your contributions are too high or you have had a change of circumstances that you are not aware of.
If you have no success with your Trustee, seek independent advice from your local advice agency.
HI
I would like assistance to stop any arrestment and to give me breathing space, in order that I can get my affairs in order using the Statutory Moratorium Procedure.
I have never been in this position, so would request some direct advice and support to get me through this as soon as possible.
I work long hours at present in a legal sector job from home and whilst trying to care for two of my three children as well.
Anything you can do to support me with a Staturory Moratorium application to cover me for up to a period of 6 months would be greatly appreciated.
I may also have other associated queries about some recent events which have happened to me financially today and which I may require immediate support and advice about.
Hi G
Applying for a Staturory Moratorium is relatively simple and fast and also free.
You can do so by visiting the Scottish Government page where you make the application and completing the online form. You do this by Creating a Debtor Moratorium.
There is also a Form 33 that must be completed and uploaded when completing the online form.
A Staturory Moratorium can usually be added to the Register within 24 hours of you uploading it and it is free to do so.
Registering a Moratorium will not usually damage your credit rating, but missing payments to your debts may.
Also Moratoriums don’t freeze interest and charges.
What they do is stop Sheriff Officers from executing Diligence and Creditors petitioning for your bankruptcy.
Even though the online site you apply for a Statutory Moratorium is the Accountant in Bankruptcy Website, you don’t need to worry you are not going Bankrupt. Ths AIB are just the Government agency that deals with them.
Unfortunately, I cannot give you personalised advice as to the suitability of a Moratorium for you, or in relation to your personal circumstances (the aim of this site is just to inform and direct people to where they can get help) if your look at the list of local advice agencies I have (Click Here) and contact your local one, they will help you and discuss what the best options are.
Although most are not open to the public, they are still operating telephone services.
Finally, it is important to remember Statutory Moratoriums are intended to give you breathing space for up to six months. Ideally, if you can get advice and find a solution before then, this is usually best.