Personal insolvency changes come into effect

By ICAS Editorial Team

1 April 2015

The start of April sees the introduction of the Bankruptcy and Debt Advice Scotland Act, known as BADAS for short.

Significant changes to personal insolvency take effect from 1 April, 2015 in Scotland.

Changes under the Bankruptcy and Debt Advice (Scotland) Act 2014 (or BADAS as it has become known) come into effect and will play a substantial part in delivering the Scottish Government's vision of a Financial Health Service for Scotland.

David Menzies, ICAS Director of Insolvency, said: "The changes implemented under BADAS will have an impact on both debtors and creditors.  Creditors need to be aware that they will now only have 120 days to lodge a claim in bankruptcies otherwise they will lose their entitlement to any dividend.

"For debtors, they will now be subject to a further year of income contribution, extending from three years to four years.  Although it is expected that the majority of debtors will still receive their discharge after one  year, this will no longer be an automatic entitlement but will be at the discretion of the Accountant in Bankruptcy and subject to satisfactory co-operation with their trustee."

Further changes to the personal insolvency regime include:

  • Six-week protection period (moratorium) from legal action to allow debt advice to be sought 
  • Compulsory financial advice for debtors before they apply for their own bankruptcy 
  • Introduction of a Minimal Asset Process bankruptcy for those debtors with debt up to £17,000, unable to pay a contribution and negligible assets.  Application fee £90 (normally £200) and automatic discharge after six months 
  • The use of a common basis of assessment for debtor contributions in bankruptcy, trust deeds and Debt Arrangement Scheme 
  • Ability for debtor contributions to be deducted from employment or other income 
  • A period where assets acquired after bankruptcy will fall within the bankruptcy extended from three years to four years 
  • Deferred discharge where debtors cannot be traced, and provisions to allow bankruptcies to be reopened where undisclosed assets discovered 
  • Transfer of certain decision making powers from the court to the Accountant in Bankruptcy. 

"Overall, the changes being implemented through BADAS bring a more balanced approach to the rights of debtors and creditors in bankruptcy," said David. 

Find out more about the Bankruptcy and Debt Advice (Scotland) Act 2014 on the ICAS website.


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