Moratorium on diligence
Sections 195 to 198 of the Bankruptcy (Scotland) Act 2016 allow for a moratorium on diligence if the client intends to apply for a DPP, trust deed or sequestration. The client or the debt adviser can submit the application for a moratorium.
The AiB enters all moratoria granted on the Register of Insolvencies and the DAS Register, where they remain for six months.
During the moratorium period, creditors cannot enforce payment of any debt. They may not serve a charge for payment, commence or execute any diligence to enforce any debt owed by the client, or petition for sequestration.
Only one moratorium is permitted in any 12-month period, except in cases where a client has previously been in a joint DPP which has been revoked due to a relationship breakdown or the death of one of the clients. In these circumstances, the client may apply for another moratorium within 12 months.
The moratorium entry on the DAS register and Register of Insolvencies is removed or amended on the earliest of:
•six months from the date entered on the register have elapsed and a DPP application has not been received; or
•the date a notice is entered on the DAS Register that an application for a DPP has been received and is yet to be approved – provided that the application is made before the six months moratorium period has ended.
If you or the client have made a moratorium application, and you do not submit an application on behalf of the client before the six months have finished, the client loses any protection against creditor enforcement action.1Part 15 B(S)A 2016 The client is therefore open to enforcement action by their creditors after the six months, unless and until a DPP application is received by the DAS administrator and issued to creditors. Protection starts again from the date the DPP proposal is sent to creditors, and remains in place until the DPP is approved or rejected.