Bankruptcy and Diligence (Scotland) Bill completes Scottish Parliament passage

The Bankruptcy and Diligence (Scotland) Bill completed its progress through the Scottish Parliament on 6 June 2024¹. Section 1 of the Bill requires Scottish Ministers to create a moratorium on debt recovery action by creditors against individuals who have a mental illness¹.

That provision is an enabling power. It sets out the framework for the moratorium, with the detail of the process to be provided in secondary legislation¹. A Mental Health Moratorium Working Group was formed to look at possible ways the moratorium could work in practice, with membership including mental health professionals, representatives from the debt advice community and the creditor sector¹. A series of meetings and in-depth discussions resulted in the publication of the Mental Health Moratorium Working Group report of recommendations¹.

A draft of the required secondary legislation has now been produced, the draft Debt Recovery (Mental Health Moratorium) (Scotland) Regulations¹. The Scottish Government says the draft is based on the working group's report of recommendations, feedback from the Mental Health Moratorium public consultation, and the various debates during scrutiny of the Bill¹. A consultation on the latest draft of the regulations and the detailed implementation of the moratorium process was published on 9 December 2024¹.

The consultation document carries the ISBN 9781836017837 and sits under the Jobs and Wellbeing Economy Directorate, with economy and health and social care as its topics¹. The Scottish Government notes that some minor changes have been made to the regulations since they were shared with the Scottish Parliament¹.

Why it matters for households

The moratorium is aimed at people in Scotland who have a mental illness and owe money. Once the regulations are finalised and commenced, it would stop creditors taking debt recovery action against them, under the framework set by section 1 of the Bill¹. The Bill itself does not set out who qualifies, how a moratorium is applied for, or how long it lasts; those details are to be set in secondary legislation, which is still in draft and subject to consultation feedback and the will of Parliament¹. Until the regulations are finalised and commenced, the position on debt recovery for this group is unchanged.

The practical effect for affected households therefore depends on regulations that have not yet been made. The consultation published on 9 December 2024 sought feedback on the latest draft and on the detailed implementation of the moratorium process¹. The Scottish Government has not reported a commencement date for the regulations.

What happens next

The Scottish Government said feedback received during the consultation would enable it to finalise and commence the Mental Health Moratorium Regulations, subject to the will of Parliament¹. No date for finalising or commencing the regulations has been reported.