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New debt scheme in England and Wales 'should be extended to Scotland as well'

The UK Treasury has today announced a ‘Breathing Space’ scheme in England and Wales that will give people in debt 60 days to seek help while their creditors freeze the interest, and offers additional protections for people whose debt has led them to experience a mental health crisis.

The scheme is similar to one already in place in Scotland, but it lasts for a longer period. So CAS is today calling on the Scottish government to extend the Scottish scheme to ensure that debtors on both sides of the border are treated equally. 

Citizens Advice Scotland’s Financial Health spokesman Mike Holmyard says, 

“Debt remains one of the biggest issues brought to the Scottish CAB network. Our advisers deal with debt cases every day, and we see how it can destroy lives. So we welcome this scheme, and we want to see its protections extend to people in Scotland as well.  

“Scotland in fact led the way here, by introducing a similar scheme called a ‘moratorium’ in 2015. People in debt can apply for a moratorium to prevent their creditors from taking enforcement action for 42 days. 

“So we call today on the Scottish Government to provide the same protections for people in debt on both sides of the border by extending the moratorium in Scotland to 60 days. We also urge them to replicate the proposals of ‘Breathing Space’ with regard to freezing interest and helping those who are struggling with debt and poor mental health in Scotland.”



The Treasury has announced:

  1. A 60-day Breathing Space period to be introduced from 2021, so people with problem debts can be protected from enforcement action from creditors and have interest on their debts frozen.
  2. those in mental health crisis will see further protections while they receive treatment
  3. the scheme will cover wide range of debts, including local and central government debts
  4. during this 60-day period, individuals (except those in mental health crisis) must engage with professional debt advisers, so they can find a long-term solution to their debts and get back on track with payments.

Moratoriums were introduced by Section 8 of the Bankruptcy and Debt Advice (Scotland) Act 2014, which amended the Bankruptcy (Scotland) Act 1985. They allow a person in problem debt to apply to the Accountant in Bankruptcy for a moratorium if they intend to apply for a statutory debt option (such as the Debt Arrangement Scheme, Bankruptcy or a Protected Trust Deed). The person can only benefit from a moratorium if they have not had one in the previous 12 months. A moratorium prevents their creditors from enforcing debts by arresting their wages or bank accounts or seizing their goods, and also prevents the creditor from applying for bankruptcy, during the moratorium period. It can be extended if the person in debt is actively entering into a debt solution. If it lapses then creditors can enforce their debts as usual. It does not stop interest and charges accruing and – unlike the proposals for Breathing Space – does not make any accommodation for mental health crisis, which is often associated with debt problems.