Hi,

I was at a Money Advice Scotland Consultation Day yesterday to discuss the new Bankruptcy and Debt Advice (Scotland) Bill. The session was held with Claire Orr, Executive Director at the Accountant in Bankruptcy for Policy and Compliance. This was attended by a mixture of money advisors and people who work in the private sector. I thought it would be useful for me to give some information on what was discussed.

An overview of the bill and what was discussed was the following:

Advice & 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

A lot of the above may not be relevant to a lot of people so I've given a summary to what I think could be of interest below:

Application for Sequestration only if advice has been given by an approved money advisor. The application must now include a declaration by the advisor the advice has been given.

Financial Education for individuals who the Trustee deems appropriate. This could be an online guide and currently being developed by MAS and the AIB. This won't be a classroom style thing which people had concerns about.

One Common Financial Statement now which will be used instead of the Stepchange figures and other guideline figures. This will ensure that everyone is working from the same guideline figures when assessing the level of contribution that can be made by an individual.

Individuals if they can afford to will now make 48 months payments in a Sequestration with an option of a payment break for 6 months in appropriate circumstances. If an individual misses two payments without reason, the Trustee can at their discretion apply for a wage arrestment. Claire Orr was quite specific in that people who could pay should pay.

A new Minimal Asset Process (MIP) ÔÇô this will replace a LILA. Individual must not be able to afford a contribution or on benefits for at least 6 months, debts of £1,500+, assets not exceeding £2,000, no single asset more than £1,000 (cars excluded and no land. Individual will be discharged after 6 months and the can only use MIP once in 10 years. The proposed application cost is estimated to be £100.

A new 6 week Moratorium on Diligence across all solutions now for DAS, PTD and SEQ. This will go onto the Register of Insolvency and also the DAS register.

In terms of the discharge, this won't be automatic any longer expect in MAP cases. The Trustee will now apply to the AIB for debtors discharge. If the Trustee is not applying for debtors discharge they must explain why and the debtor has the right of appeal to a Sheriff. The Discharge can delayed discharge indefinitely if debtor cannot be traced. Also, the process for reopening a case will not be easier if assets are discovered.

Claire Orr also touched on the PTD regulation changes which are due to come into force in Autumn but didn't want to go into too much detail. These were 48 monthly contributions, surplus income assessed using the Common Financial Statement which will allow for transparency. £5,000 minimum debt level, Trustees fees based on fixed upfront fee and % of realisations.

These changes are not due to come into force until April 2015. It was interesting to hear different points of view from money advisors and also people who work in the private sector.