Bankruptcy and Debt Advice (Scotland) Act 2014

Overview

The aforementioned act was passed by the Scottish Parliament on the 20th March 2014 and the measures within it come into effect on the 1st April 2015 as do a number of regulations and statutory instruments connected with the act.

The AiB have also indicated that the other proposed legislation that they were working on a Bankruptcy consolidation bill has been indefinitely postponed by the Scottish Government.

The purpose of the act is to provide fair access to debt advice, debt relief and debt management. There is also a general drive to streamline processes and controversially in some quarters remove some functions and powers from the Sheriff and put them in the hands of the AiB. The other aim of the legislation is to create what the AiB terms a financial health service including financial education for debtors.

The key provisions in the act and accompanying regulations are:

  • All debtors seeking advice and an AiB statutory debt relief/management product will be assessed using a common financial tool and the Common Financial Statement has been designated.
  • The introduction of Financial Education. An e-learning module developed by Money Advice Scotland in draft form is currently available. This will be a mandatory step for some debtors prior to discharge from their sequestration although available to anyone.
  • A new route into bankruptcy replacing the Low Income Low Asset process. MAP or Minimal Asset Process is a soft touch route into sequestration for debtors who are not homeowners have few assets and total debts under £17,000. Discharge will normally occur after six months
  • The introduction of Business DAS which will allow certain types of business such as partnerships and trusts to enter into debt payment programs.

Regulations
The Bankruptcy Fees (Scotland) Regulations 2014
The Bankruptcy (Applications and Decisions)(Scotland) Regulations 2014
The Bankruptcy (Scotland) Regulations 2014

Draft Regulations
The Common Financial Tool etc. (Scotland) Regulations 2014
The Bankruptcy (Money Advice and Deductions from Income etc.)(Scotland) Regulations 2014