MONEY worries can happen to anyone. Manageable debt can quickly become problem debt if you fall ill or your income drops suddenly.

Many Scottish households have seen their financial difficulties exacerbated over the last year with a rapid rise in the cost of living.

A new Bankruptcy and Diligence (Scotland) Bill sounds like a great idea to give people in crisis debt more rights. Such a Bill was introduced in the Scottish Parliament at the end of April and is currently before the Economy and Fair Work Committee for “stage one” initial consideration.

But there’s a problem. The Scottish Government’s Bankruptcy Bill is somewhat light on debtor’s rights or detail. Its flagship initiative is a new moratorium on debt recovery action for people with a mental illness.

The Bill itself doesn’t specify how this new initiative will work as it only creates enabling powers for Scottish Ministers to introduce the scheme by regulations. That’s odd because there’s been such a scheme operating in England since May 2021.

People in England receiving mental health crisis treatment in hospital or at home can apply online for a “mental health crisis breathing space”. It lasts for 30 days after crisis care ends.

When on the scheme, a landlord or lender and other companies can’t evict you for missed rent or mortgage payments; install a prepayment utilities meter; start or continue court action to get their money or charge interest or fees on payments you’ve missed.

If the new Scottish moratorium follows the existing general moratorium for debtors it won’t prevent eviction or repossession. It would have been easy to have specified some substance in the Bill on this welcome initiative. The rest of the Bill is largely technical and tidying up changes.

The Bill’s policy memorandum says this about the moratorium for people with mental illness: “The policy intention underpinning the present proposal is to create a new and bespoke form of moratorium protection which is to be available to a specific group of individuals being those who are experiencing serious difficulties with their mental health as well as having problem debt”.

Given the Scottish Government has been working on its review of statutory debt solutions since September 2019 one might have expected a little bit more detail in the Bill. Indeed, one might have expected more practical improvements to help those struggling because of the cost-of-living crisis.

The 2022/23 Scottish diligence statistics reveal that over 91% of debt enforcement – “diligence” – occurs following a summary warrant in respect of council tax debts. That’s over 240,000 cases.

From this, the most popular form of debt enforcement was against a debtor’s bank account – over 188,000 cases. The second most common form of debt enforcement was earnings arrestments – seizure of part of a person’s wages – with 52,000 cases.

Last year the Scottish Parliament passed an amendment to increase the protected minimum balance (PMB) for bank arrestments from £566 to £1000. That means the first £1000 of money in your current account cannot be seized by a creditor so that you have money to live on and pay ¬essential bills.

We’ve yet to do the same for those subject to wage arrestments. At the moment the PMB for wages is £655.83 per month. Anything over that can be claimed by a credit at 19%, rising to 23% of earnings exceeding £2047.65 and 50% of earnings exceeding £3078.47.

Why not increase the PMB for earning arrestments to £1000 like for bank account arrestments? Such a simple change would create a profound respite for those in crisis debt because of the cost of living crisis.

Alan McIntosh is a money adviser who carried out an online survey on advicescotland.com that asked: “Tell us what effect your wage arrestment has had on you and your ¬family?”.

Here are some responses from the survey: “I’ve severe stress resulting in constant worry and sleepless nights. Wage deductions of £115 a week is a lot – that’s a food shop or something else and I’m off work ill and worry what’s going to happen”.

“My mental health has deteriorated and this has made it harder for me to work which is then having a negative impact on my physical health.”

“I’m now stuck in the vicious circle of being unable to pay my current year’s council tax due to wage arrestment to pay off previous years.”

“I live in a private let house. I’ll not be able to afford my rent.”

“I can’t pay my current council tax due to this. They are taking over £400 per month off my wages. I work part-time as does my husband. I’ve a diagnosis of fibromyalgia. This may force me to go back full-time and affect my physical health.”

I think it’s time to beef up the Bill.