Bankruptcy Law Reform Bill introduced
A new bill, delivering significant reform to Scottish bankruptcy legislation has been introduced to the Scottish Parliament.
The Bankruptcy and Debt Advice (Scotland) Bill 2013 aims to ensure that fair and proportionate debt management and debt relief mechanisms are available to the people of Scotland, modernising bankruptcy for the 21st century.
This is in line with the Accountant in Bankruptcy’s (AiB) vision of a Financial Health Service, to provide rehabilitation to people and organisations in relation to their financial pressures. The Bill will ensure that everyone will have access to money advice before entering any statutory debt solution; it will provide financial capability education for those who need it; and it will help make sure that those who can pay, do pay, thus delivering the best return for creditors.
The Scottish Government recognises the responsibility it has to take action, where it can, to address these problems and introduce measures to help those people in Scotland who are struggling under the burden of debt. This new legislation will better serve the interests of the people of Scotland, while ensuring the rights and needs of those in debt are balanced with the needs of creditors and businesses.
Welcoming the introduction of the Bill, Minister for Energy, Enterprise and Tourism, Fergus Ewing MSP said:
“This is one of the most ambitious and far-reaching reforms ever considered by both the Scottish Government and Accountant in Bankruptcy. The Bill provides access to fair and just processes, allowing debtors to gain control of their debt and their lives and ensures that Scotland leads the way in meeting the rights and needs of debtors and creditors.
“It is vital that people who are experiencing financial hardship have the benefit of advice on the range of options open to them. By taking advice early, many people may be able to avoid bankruptcy by reaching an agreement with their creditors.
“The Debt Arrangement Scheme (DAS) has proven to be a very successful initiative and provides a viable solution for people in debt, helping them to meet the financial pressures they face. It is a real alternative to bankruptcy which should always be looked on as a last resort.
“The reforms provided for in this Bill ensure that our law on debt relief can deal with the challenges we face in modern society, providing appropriate solutions and protection to both those in debt and their creditors.”
Other provisions in the Bill include:
- The development of a Common Financial Tool for use by money advisers;
- The development of a new ‘No Asset Process’ route into bankruptcy;
- Altering the process for discharge of debtors, in order that the debtor must satisfactorily co-operate with their trustee and with creditors;
- Provision for AiB to review decisions before onward appeal to the Sheriff Court;
- A more efficient process for e-Applications over the web;
- Enabling AiB to transfer debtors between products more easily;
- Improving the processes for re-opening bankruptcy cases;
- Transfer of certain mainly administrative bankruptcy functions from the Sheriff Courts; and
- The requirement for creditors to submit claims within 120 days.
More details on the Bankruptcy and Debt Advice (Scotland) Bill 2013, can be found on the AiB website.
The Debt Arrangement Scheme (DAS) is a statutory scheme run by the Scottish Government to help debtors to pay multiple debts by giving them more time to pay without hassle or threat of court action from their creditors. DAS freezes interest, fees and charges on their debts from the date the DAS payment programme is approved. These charges, which would have become payable after the date of approval, will be written off if the programme is completed. The scheme is delivered free by approved money advisers at local authority money advice units or Citizens Advice Scotland. The scheme protects debtors assets, including their home (as long as they keep up their mortgage payments).
Accountant in Bankruptcy (AiB) is an Executive Agency of the Scottish Government with responsibility for administering the process of personal bankruptcy, administering the Debt Arrangement Scheme (DAS) and recording corporate insolvencies in Scotland. AiB’s mission is to ensure access to fair and just processes of debt relief and debt management for the people of Scotland, which takes account of the rights and interests of those involved. The Agency operates independently and impartially whilst remaining directly accountable to Scottish Ministers. An AiB Media Briefing Pack is available on the AiB website.