Emergency Legislation: Coronavirus (Scotland) Bill
On 1 April the Scottish Parliament passed emergency legislation, known as the Coronavirus (Scotland) Bill. The version of the Bill which was passed was slightly amended from the original version following representations made by Scotland’s criminal solicitors who were alarmed at the proposal to withdraw jury trials in what was being dubbed the Carloway Courts.
What’s in Scotland’s emergency Coronavirus Bill?
Although legislation had already been passed by Westminster, in order to address some devolved matters, Holyrood had to follow suit. Notable provisions include protection for those who live in either social or private rented accommodation by extending the notice period for eviction to 6 months in certain circumstances; the use of video or audio link for participants court hearings matters; the extension of time limits in criminal proceedings; and early prisoner release.
In addition, for individuals who find themselves in financial difficulty, the moratorium period to protect from creditor action has been extended significantly from 6 weeks to 6 months.
The extended moratorium period
In light of the current circumstances, many creditors appear to be taking a less aggressive approach to debt recovery and we are now seeing Government “encouragement” to the retail banking sector to offer mortgage, loan and more recently credit card repayment holidays. In addition, the current guidance from the Scottish Court Service is that only emergency or essential civil business will be dealt with, a definition which is unlikely to include debt recovery or sequestration cases. Urgent cases will include those where time bar is an issue. That said, there will be cases where a creditor is insistent on recovering a debt and once normal business has resumed we anticipate that the number of debt recovery matters against individuals will increase. The new moratorium period gives individuals a greater opportunity to try and resolve their difficulties without the additional pressure of court actions and diligence. In addition to the extended moratorium period, the emergency legislation will include scope for the moratorium to be extended twice, each time for a further period of 6 months, giving 18 months in total. How that will work in practice remains to be seen – the existing position was that an individual could only apply for a 6 week moratorium once every 12 months. The emergency legislation is not expected to remain in place for more than 18 months and unless it is actively extended most of the legislation will automatically expire after 6 months.
How can we help
Whilst the extended moratorium period undoubtedly offers further protection for individuals, timing will be critical. If it is unlikely that a creditor is going to take action against within the next 6 months, it may be advisable to hold off seeking a moratorium because you may be unable to extend it once the 6 month period has expired, particularly if the emergency legislation is not extended. In addition, the name of all individuals who have sought a moratorium is recorded in the Public Insolvency Register so the moratorium should still only be applied for as a last resort. If you wish to discuss the options available to you if you think a creditor is likely to take action against you at this time please contact either our Edinburgh office on 0131 526 3280 or our Wick office on 01955 604188.