Statutory Moratorium – Scotland: A Comprehensive Guide

What is a Statutory Moratorium?

A statutory moratorium is a temporary period during which a person or business facing financial difficulties is protected from their creditors. During this time, creditors are not allowed to take any action to recover their debts. The aim of the statutory moratorium is to provide breathing space for the debtor to explore options for resolving their financial situation, such as entering a formal debt solution like a Trust Deed, Debt Arrangement Scheme, or Sequestration.

Eligibility Criteria

To be eligible for a statutory moratorium, the debtor must be a resident of Scotland and have unsecured debts. Both individuals and businesses can apply for a statutory moratorium, although the process may differ slightly.

It is important to note that a statutory moratorium cannot be used to protect a debtor from certain types of debts, such as court fines, student loans, and child maintenance payments. Additionally, a statutory moratorium cannot be used by debtors who have entered bankruptcy, are in a Trust Deed, or are already under a Debt Arrangement Scheme.

Duration of a Statutory Moratorium

A statutory moratorium in Scotland lasts for six weeks. This period is designed to give the debtor sufficient time to seek professional advice and consider their options for resolving their financial situation. It is important to act quickly during this period, as the protection from creditors will be lifted once the six-week moratorium has ended.

Applying for a Statutory Moratorium

  1. Seek Professional Advice

Before applying for a statutory moratorium, it is essential to seek professional advice from a qualified debt adviser or insolvency practitioner. They will help you determine whether a statutory moratorium is appropriate for your situation and guide you through the application process.

  1. Complete the Application Form

The debtor, or their adviser, must complete the Statutory Moratorium Application Form (Form 29). The form will require you to provide personal details, information about your debts, and your reasons for seeking a statutory moratorium.

  1. Submit the Application Form

The completed application form must be submitted to the Accountant in Bankruptcy (AiB), Scotland’s insolvency service. The AiB will review the application and, if accepted, register the moratorium on the Register of Insolvencies (RoI). The RoI is a public record, meaning that details of the moratorium will be publicly available. This step may be completed by the debtor’s adviser on their behalf.

  1. Notify Creditors

Once the statutory moratorium is registered, it is the debtor’s responsibility to notify their creditors. This can be done by sending a copy of the Form 29 to each creditor. It is important to ensure that creditors are aware of the moratorium to prevent any recovery actions during the protected period.

Benefits of a Statutory Moratorium

A statutory moratorium offers several benefits to debtors facing financial difficulties:

  1. Protection from Creditors: During the six-week moratorium period, creditors are legally prohibited from taking any action to recover their debts, including legal proceedings, enforcement actions, and contacting the debtor about the debt.
  2. Time to Consider Options: The temporary respite allows debtors to seek professional advice and explore their options for dealing with their debts, such as entering a Trust Deed, Debt Arrangement Scheme, or Sequestration. This enables them to make informed decisions about the best course of action to resolve their financial situation.
  1. Potential for Negotiation: The statutory moratorium can sometimes encourage creditors to be more open to negotiating a repayment plan or settlement. Knowing that the debtor is actively seeking a solution to their financial problems may make creditors more willing to cooperate and reach a mutually beneficial agreement.

Drawbacks of a Statutory Moratorium

While a statutory moratorium can provide valuable protection and time to explore options, there are also some potential drawbacks to consider:

  1. Public Record: Details of the moratorium are registered on the Register of Insolvencies, which is a public record. This means that anyone can access the information, which may have implications for the debtor’s privacy and reputation.
  2. Limited Duration: The statutory moratorium lasts for six weeks, after which the protection from creditors is lifted. If a suitable debt solution is not found and implemented during this time, the debtor may still face legal action from creditors.
  3. Not a Long-term Solution: The statutory moratorium is only a temporary measure designed to give the debtor time to find a long-term solution to their financial difficulties. It does not resolve the underlying debt problem or provide a permanent solution.

Alternatives to a Statutory Moratorium

If a statutory moratorium is not the right option for a debtor, there are alternative debt solutions available in Scotland:

  1. Trust Deed

  2. A Trust Deed is a legally binding agreement between the debtor and their creditors that allows the debtor to repay a portion of their debts over a fixed period, usually four years. At the end of this period, any remaining debts are written off. This option is suitable for debtors with a regular income and a significant amount of unsecured debt.
  3. Debt Arrangement Scheme (DAS)

  4. A Debt Arrangement Scheme is a government-backed debt management plan that allows the debtor to repay their debts in full over an extended period. Interest and charges on the debts are frozen, and the debtor is protected from legal action by their creditors for the duration of the DAS.
  5. Sequestration

  6. Sequestration is the Scottish term for bankruptcy. It involves the transfer of the debtor’s assets to a trustee who will sell them to repay the debtor’s creditors. After a set period (usually one year), any remaining debts are written off. Sequestration should be considered as a last resort, as it has significant consequences for the debtor’s credit rating and financial future.


The statutory moratorium in Scotland offers temporary protection from creditors for individuals and businesses facing financial difficulties. By providing a six-week period of respite, it allows debtors to seek professional advice and explore their options for resolving their financial situation.

However, it is important to consider the potential drawbacks and alternative debt solutions before applying for a statutory moratorium. Consulting a qualified debt adviser or insolvency practitioner is essential to ensure that the most appropriate course of action is taken.

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