Changes to the rights of Scottish creditors and debtors are on the way, following the recent passing of the Bankruptcy and Debt Advice (Scotland) Bill by the Scottish Parliament.

According to the Scottish Government, the Bill is designed to balance the rights of those in debt with the needs of creditors and businesses. Its provisions reflect the Accountant in Bankruptcy’s vision of a ‘Financial Health Service’, which will provide rehabilitation to individuals and organisations in relation to their financial pressures.

Overall objectives of the Bill

The Bill was introduced into the Scottish Parliament in June last year, with the overall objectives of:

• Ensuring that the people of Scotland have access to fair and just processes of debt advice, debt relief and debt management.
• Ensuring those individuals who can pay should pay their debts, whilst acknowledging the wide range of circumstances and events that contribute towards financial difficulty and insolvency.
• Securing the best return for creditors by ensuring that the rights and needs of those in debt are balanced with the rights and needs of creditors and businesses.

Balancing the needs of debtors and creditors

The Bill is designed to be fair to both debtors in how they manage their debt and creditors in carrying out their debt recovery activities. It introduces new measures to facilitate the needs of both parties in a number of ways:

• Debtors will be required to receive advice from an approved money adviser before entering bankruptcy.
• The introduction of a Minimal Asset Process, which offers debt relief quickly and at less than half the price of an application for bankruptcy under the current equivalent scheme.
• A single Scottish-specific tool called the Common Financial Tool has been developed for money advisers to use in determining the balance of a debtor’s income and outgoings. This will help ensure that an individual’s ability to pay a contribution towards their debts is assessed in a way that is consistent and sustainable.
• In recognising the importance of the role creditors and businesses play in the economy at large, the Bill supports the general principle that those who can pay should be helped to pay their debts as simply and easily as possible, providing a better return to creditors. For example, in cases where there is evidence to show that a debtor has acquired additional assets after discharge, the Bill includes a new procedure to make it easier for the case to be re-opened and for the debtor to make additional contributions.

Additional provisions

Other provisions of the Bill include:

• A requirement for a debtor to undertake mandatory financial education.
• Altering the process for discharge of debtors, in order that the debtor must satisfactorily co-operate with their trustee and with creditors.
• The requirement for creditors to submit claims within 120 days.

Financial Health Service

“We need a Financial Health Service to help us build the financial capability of people in Scotland. By working with organisations such as church groups and credit unions we will help support people to make better financial choices and prevent future problem debt,” commented Enterprise Minister Fergus Ewing, as he announced the passing of the Bill.

“And we will have a Financial Health Service that brings together different strands and sources of information and advice, so that anybody with a concern or an issue to do with debt or borrowing can find, in one place, the help and assistance that they need,” he added.

Contact our Solicitors in Glasgow

To find out how our solicitors based in Glasgow, Scotland, can help you with any debt recovery issues, please click here to fill out our online enquiry form or call us today on 0141 433 2626. We look forward to hearing from you.

Contains public sector information licensed under the Open Government Licence v2.0.