Becca Stacey, Senior Research Officer, Money and Mental Health Policy Institute

Delivering an effective mental health moratorium in Scotland

19 September 2023

  • If you live in Scotland and are struggling with debt, you can apply for a moratorium – this is a six month period of debt relief where you’re protected from legal action by your creditors
  • Scotland introduced the moratorium in 2014 and have since committed to introducing a mental health moratorium to better meet the needs of people with mental health problems
  • A mental health moratorium should be accessible, align with the duration of mental health crises, protect against interest and charges, and allow multiple applications as needed
  • The Mental Health Crisis Breathing Space debt respite scheme in England and Wales also provides important learnings regarding awareness and eligibility
  • We’ll be giving evidence to the Scottish Parliament tomorrow outlining how we would like an effective mental health moratorium to work.

When we’re struggling with our finances and are behind on bills and payments, having the time and space to get a debt resolution plan in place is key. This is why Scotland introduced a debt respite ‘moratorium’ in 2014 – providing people with a six month period of debt relief which prevents creditors taking action against them during that time. The moratorium is designed to give people respite from debt recovery action and communications while they get on top of their finances. 

But as the Scottish government has acknowledged – and we’ll be outlining when we give evidence to the Scottish Parliament’s Economy and Fair Work Committee tomorrow – further steps must be taken to ensure people with mental health problems can also benefit from this respite. This is why the Scottish government has committed to introducing a mental health moratorium. We set out what we’d like to see below.

As it stands

The current moratorium provides vital relief to many. But there are some key areas where it’s failing to provide adequate protections to people with mental health problems: 

  • You can apply for a moratorium online or through a debt advisor. But symptoms of mental health problems, including low motivation and difficulties reaching out for help, mean many people with more severe mental health problems in particular will face barriers to accessing it. 
  • A standard moratorium – which is currently set at six months – won’t always align with someone’s period of poor mental health and recovery. The time it takes to stabilise someone’s mental health and begin the process of recovery can vary considerably. Cutting debt support during treatment risks exacerbating that person’s difficulties with both their mental and financial health
  • People can only apply for a standard moratorium once every 12 months. But for people who have severe and enduring mental health problems, such as schizophrenia, bipolar or a personality disorder, episodic crises may be a recurring feature of their illness
  • There is no freezing of interest and charges on debts with the standard moratorium. But we know that during a mental health crisis people are often completely unable to engage in financial management, which means that fees, charges and interest may accrue. This can lead to debts escalating out of control, defaults, homelessness and other related issues, which can be a massive hindrance to recovery.

Mental health crisis debt respite

We want to see a mental health moratorium that is accessible to those with severe mental health problems. It should last for the duration of someone’s mental health crisis, provide protection against interest and charges, and people should be able to apply for it as many times as they need it. This would be key in preventing problem debt and consequent collections activity hindering people’s recovery from severe mental health problems.

“My mental health was so bad I didn’t care. I didn’t have the interest or motivation to worry about money or paying bills. The more I didn’t care, the bigger the problems became and the more depressed I became. And that was when I made my most serious attempt at ending my life. I couldn’t see any way out of the mess I was in.” Expert by experience

Lessons from south of the border

A similar debt respite scheme exists in England and Wales in the form of the mental health crisis breathing space (MHCBS). The original breathing space scheme took inspiration from Scotland’s moratorium, and we campaigned for it to be extended and to protect people in mental health crisis. While people in mental health crisis in England and Wales can now access debt respite via the MHCBS, there are some key implementation challenges that mean the scheme isn’t reaching its full potential. We’d encourage the Scottish government to learn from these as they introduce their mental health moratorium.

These challenges include a lack of awareness of the scheme among a wide range of mental health professionals and strict restrictions on who can approve someone’s eligibility for it. For example, only Approved Mental Health Practitioners can sign off that a person is in crisis and therefore prove they’re eligible for the scheme. 

This, combined with the fact that it isn’t routinely offered to people under mental health crisis care, means the tool is currently under-utilised and failing to reach everyone who needs it. This is why we’ve been calling for mental health breathing space in England and Wales to be automatically offered to people with a longer term detention, and for a wider range of professionals to be able to grant people’s access to it.

Turning talk into action

We’ve been feeding these insights into the mental health moratorium working group convened by Accountant in Bankruptcy. This group has proposed details of what the mental health moratorium in Scotland could look like. We’re pleased that their proposals recognise the challenges of the English and Welsh scheme, and that they’re recommending that the Scottish mental health moratorium is routinely offered to people with severe mental health problems, and that a wider range of mental health professionals can approve a person’s eligibility. 

It is now vital that the Scottish government act on these proposals and ensure their mental health moratorium is fit for purpose.