What do you need to know about the new bankruptcy regime in Scotland?

Original news

The Bankruptcy and Debt Advice (Scotland) Act 2014 (BDA(S)A 2014) makes provision for the Scottish Parliament to amend the Bankruptcy (Scotland) Act 1985 (B(S)A 1985). Its provisions include mandatory advice to begiven to debtors from an approved money adviser before making an application to enter into sequestration, and for a specific group of vulnerable debtors to receive targeted financial education, to help improve their awareness of the underlying causes of financial hardship.

What are the key changes made to B(S)A 1985?

The changes come in two parts. The first part is intended to bring about a ‘Financial Health Service’ for Scotland providing a modern system of debt advice and debt management that properly balances the rights of debtors and creditors and is fit for purpose in today’s economic environment. For example, debtors must receive compulsory money advice from a debt advisor before applying for their own sequestration or where, again for example, they have been sequestrated and have been previously sequestrated in the preceding five years. A moratorium on enforcement action is introduced to protect debtors while they make applications for their own sequestration

Debtors will become more accountable and will beexpected to make a contribution to their debts where they can. Liability for such a contribution will beassessed using a common financial tool to ensure consistency of approach, and contributions will last for four years, rather than three as at present. The period in which acquirenda (assets acquired after the date of sequestration but before the date of discharge) can beclaimed for the estate is extended to four years from the date of sequestration. If debtors