This provides sole traders concerned about a looming risk of financial distress as a consequence of the extraordinary social distancing measures in place to consider a moratorium with breathing space for up to six months when they are protected from legal action by any creditors to which they owe money.

Gordon Chalmers, partner and insolvency practitioner at Glasgow-based Wylie & Bisset, said: “A moratorium does not stop any interest and charges but could be useful if a sole trader has identified that he may need to seek advice in relation to his debt. It is only available to Scottish residents.

“The extension to the moratorium should give sole traders scope to try and ride out the current financial climate, and if not able to do so, to enter into a Debt Arrangement Scheme Payment Plan, or an insolvency solution, such as a Protected Trust Deed or a Sequestration.

“The six months extension will be helpful to sole traders as it could give them the opportunity for some financial stability if social distancing is lifted within that period, and so better able to assess the way forward and deal with any debt incurred.”

A driver for increasing the period of the moratorium from six weeks to six months is to reduce stress and protect the mental health of those worried about the prospect of creditor enforcement action during a time of increased uncertainty.

The moratorium extension gives additional time for client options to be considered properly before potentially irreversible decisions are taken, particularly as advisers may find it difficult to see the volume of clients that need help and protects clients whose problem debt is a direct result of COVID-19 and whose finances will normalise after the pandemic without the need for a formal debt solution.

Mr Chalmers added: “We are here to help sole traders register for the moratorium, and then hold their hand through the process to get them into the correct solution if one is needed.”

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