The Scottish Government is introducing new rules to help people who are struggling with both debt and mental health challenges.
The new rules are in response to the Bankruptcy and Diligence (Scotland) Act 2024, which requires Scottish Ministers to find ways to support individuals in this difficult situation.
A Mental Health Moratorium Working Group was established — including mental health professionals, debt advisors, and creditors — to provide expert advice on how a Mental Health Moratorium could work. That has resulted in the publishing of draft rules – the Recovery (Mental Health Moratorium) (Scotland) Regulations. These draft regulations are currently at the consultation stage and it is unlikely that they will be introduced until well into 2026.
What is a Mental Health Moratorium?
A Mental Health Moratorium is a temporary pause on debt recovery actions for people who are dealing with serious mental health issues. Similar protection already exists in England and Wales.
Who can apply?
To qualify, a person must meet certain mental health and debt criteria, which are set out in the draft regulations. This must be confirmed by signed statements from both a mental health professional and a money advisor. The individual must also sign a statement to show they understand and agree to the consequences of entering a Mental Health Moratorium.
How does the process work?
- The application is made by an approved money advisor to the Accountant in Bankruptcy (AIB).
- If the AIB is satisfied that all the criteria are met, they will add the Moratorium to a public register and notify everyone involved. That will include the individual, their mental health practitioner, their debt advisor, and all known creditors.
- Creditors will not be able to see information about other creditors on the register.
What happens during the Moratorium?
While a Moratorium is in place, the individual cannot apply for or obtain credit over £2,000. Creditors are not allowed to take certain legal actions, add interest or charges, or start new enforcement actions against the individual. It is important to note, however, that any actions that started before the Moratorium was registered may continue.
Creditors cannot contact the individual about the debt during the Moratorium unless:
- The contact is unrelated to the Moratorium debt,
- The individual gives permission,
- The individual has made a complaint or query,
- Or the court allows it.
How long does it last?
The Moratorium will last for six months from the day after it is registered, or until the person enters bankruptcy, a trust deed, or a Debt Arrangement Scheme—whichever comes first.
Before the six months are up, the AIB will check with the mental health professional to see if the person still meets the criteria.
Why is this important?
The Mental Health Moratorium is designed to give people struggling with mental health problems and debt some breathing space. The hope is that individuals will have time to focus on their health and, when they are ready, work out (with debt advisers) solutions to their debt problems.
When will it be introduced?
The Minister for Public Finance has recently extended a consultation on the draft regulations. As a result, it appears unlikely that the draft regulations will be laid before the Scottish Parliament during its current session. It is therefore likely that a Mental Health Moratorium won’t be introduced until sometime after next year’s (2026) Scottish Parliament Election.
