Bankruptcy and Debt Advice (Scotland) Bill

Claire Orr

Background

• Consultation in spring 2012• Government response autumn 2012• On-going dialogue with stakeholders• Bill introduced to Parliament June 2013• DAS Regulations amended from 2 July• PTD changes from November, Corporate

Insolvency and Business DAS to follow

Overview of the Bill

• Advice and Education • Payments by debtor following sequestration • Minimal Asset Process• Moratorium on Diligence• Application process• Administration of estate• Discharge• Records• Functions of sheriff and AiB• Review of decisions by AiB

Advice

• Application for sequestration only if advice has been given by an approved money adviser

• Application must now include a declaration by the adviser that advice has been given

• A definition provided of who can act as money adviser will be made by Regulations

Education

• Provides for Regulations to set appropriate courses of financial education for debtors whose financial history and circumstances Identify them as vulnerable to recurring debts

• Content, format and delivery of the education will be set out in Regulations

Payments by Debtor

• Power to provide a common financial tool for assessing a debtor’s income, allowed expenditure and debtor’s contribution

• Debtor required to undertake to pay the contribution determined by the common financial tool

• Standard period of contribution – 48 months• New ‘debtor contribution order’ replaces

Income Payment Order. • New payment break of up to 6 months

Minimal Asset Process

• New Minimal Asset Process (MAP) – replaces LILA

• Assessed as not able to make a contribution or has been on benefits for at least 6 months

• Debts of at least £1,500 but no more than £10,000

• Total assets do not exceed £2,000 and no single asset of more than £1,000 (except car, up to £3,000) and no land

• 6 month discharge• Once in 10 year access to MAP

Moratorium on Diligence

• A new moratorium will apply on giving notice of intention to apply for a statutory debt solution

• Details will be entered by AiB on RoI and DAS Register

• Protected for 6 weeks• No arrestment, money attachment, interim

attachment or attachment of estate can have effect during this period

• Only one intimation in a 12 month period

Application process

• New statement of undertaking to be signed by the debtor which includes paying the determined financial contribution

• Failure to sign or comply could mean a delay in discharge

Discharge

• No automatic discharge, except in MAP cases• Trustee will apply to AiB for discharge of

debtor at the end of the sequestration• If the Trustee is not applying for discharge,

must explain to debtor why not• Appeal to Sheriff if debtor disputes• Discharge delayed indefinitely if debtor cannot

be traced • Process for re-opening if assets discovered

that would have vested in the trustee

Functions of sheriff and AiB

• Administrative procedures passing to AiB from sheriff

• A few examples – application by a Trustee for Direction

• Recall of sequestration where debts can be paid in full

• Appointment of replacement Trustee• Bankruptcy Restrictions• Curing defects

Review of decisions by AiB

AiB will have a new Review function in relating to some of its decisions:• Interim trustee• Award of bankruptcy• Replacement trustee• Adjudication of creditors claims• Discharge of Trustee or Debtor

Other Legislative changes

• DAS changes took effect on 2 July 2013• PTD changes come into effect on 28

November• Corporate Insolvency – December• Business DAS – 2014 • Bankruptcy and Debt Advice (Scotland) Bill

and Consolidation – commencement April 2015

Questions for consideration

• What will you need to do in your organisation to prepare for the changes ahead?

• What help will you need from AiB and others?

Claire Orr, Executive Director, Policy and Compliance0300 200 2699, claire.orr@aib.gsi.gov.uk

1 Pennyburn Road, Kilwinning, Ayrshire, KA13 6SAT 0300 200 2600 F 0300 200 2601 W www.aib.gov.uk

THANK YOU