Bankruptcy and Debt Advice (Scotland) Act 2014

JurisdictionScotland
Citation2014 asp 11


Bankruptcy and Debt Advice (Scotland) Act 2014

2014 asp 11

The Bill for this Act of the Scottish Parliament was passed by the Parliament on 20th March 2014 and received Royal Assent on 29th April 2014

An Act of the Scottish Parliament to amend the Bankruptcy (Scotland) Act 1985; and for connected purposes.

Advice and education

Advice and education

S-1 Sequestration of estate of living debtor: money advice

1 Sequestration of estate of living debtor: money advice

(1) In section 5 of the 1985 Act (sequestration of the estate of living or deceased debtor)-

(a) in subsection (2B), after paragraph (b), insert-

"(ba) the debtor has obtained the advice of a money adviser in accordance with section 5C(1),", and

(b) after subsection (4B), insert-

"(4BA) A debtor application must-

(a) include a declaration by the money adviser who provided the advice referred to in section 5C(1) that such advice has been given, and

(b) specify the name and address of the money adviser.".

(2) After section 5B of the 1985 Act, insert-

"5C Money advice

(1) An application for the sequestration of a living debtor's estate may not be made unless the debtor has obtained from a money adviser-

(a) advice on the debtor's financial circumstances,

(b) advice on the effect of the proposed sequestration of the debtor's estate,

(c) advice on the preparation of the application, and

(d) advice on such other matters as may be prescribed.

(2) In this Act, "money adviser" means a person who-

(a) is not an associate of the debtor, and

(b) is of a prescribed description or falls within a prescribed class.".

S-2 Financial education for debtor

2 Financial education for debtor

After section 43A of the 1985 Act, insert-

"43B Financial education

(1)The trustee must notify a living debtor that the debtor is required to undertake a prescribed course of financial education (a "financial education course") specified by the trustee if, in the opinion of the trustee-

(a) any of the circumstances mentioned in subsection (2) apply, and

(b) undertaking the course would be appropriate for the debtor.

(2)The circumstances are-
(a)in the period of 5 years ending on the date on which the sequestration of the debtor's estate was awarded-

(i) the debtor's estate was sequestrated,

(ii) the debtor granted a protected trust deed,

(iii) an analogous remedy (within the meaning of section 10(7)) was in force in respect of the debtor, or

(iv)the debtor participated in a debt management programme under which the debtor made regular payments (including in particular a programme approved in accordance with section 2 of the debt arrangement and attachment (scotland) act 2002 (asp 17)),

(b) the debtor is subject to, or under investigation with a view to an application being made for, a bankruptcy restrictions order,

(c) the trustee considers that the pattern of the debtor's behaviour, whether before or after the award of sequestration, is such that the debtor would benefit from a financial education course,

(d) the debtor agrees to undertake a financial education course.

(3)The trustee must decide whether to issue a notification under subsection (1)-

(a) before the end of the period of 6 months beginning with the date of award of sequestration, and

(b) in a case where section 54F applies, as soon as reasonably practicable after the trustee ascertains the whereabouts of the debtor or the debtor makes contact with the trustee.

(4)A debtor must not be required to undertake or, as the case may be, complete the financial education course specified by the trustee if, in the opinion of the trustee-

(a) the debtor is unable to participate in the course as a result of the debtor's health (including by reason of disability or physical or mental illness), or

(b) the debtor has completed a financial education course in the period of 5 years ending on the date on which the sequestration of the debtor's estate was awarded.

(5)Regulations under subsection (1) may in particular-

(a) prescribe the content, format and method of delivery of a course,

(b) prescribe different courses for different circumstances,

(c) make provision for particular courses to be specified by a trustee where particular circumstances in subsection (2) apply.".

Payments by debtor following sequestration

Payments by debtor following sequestration

S-3 Debtor's contribution: common financial tool

3 Debtor's contribution: common financial tool

(1) After section 5C of the 1985 Act (inserted by section 1(2)), insert-

"5D Assessment of debtor's contribution

(1) The Scottish Ministers may by regulations specify a method (the "common financial tool") to be used to assess an appropriate amount of a living debtor's income to be paid to a trustee after the sequestration of the debtor's estate (the "debtor's contribution").

(2) Regulations under subsection (1) may in particular-

(a) prescribe a method for assessing a debtor's financial circumstances (including the debtor's assets, income, liabilities and expenditure),

(b) prescribe a method for determining a reasonable amount of expenditure for a debtor after the sequestration of the debtor's estate,

(c) prescribe the proportion of a debtor's income that is to constitute the debtor's contribution,

(d) prescribe that a method determined by another person is to be used (with or without modification in accordance with regulations made under subsection (1)) as the common financial tool.

(3) The common financial tool must ensure that the amount of reasonable expenditure for a debtor is not less than the total amount of any income received by the debtor by way of guaranteed minimum pension (within the meaning of the pension schemes act 1993 (c.48) ).

(4) The common financial tool must ensure that an amount is allowed for-

(a) aliment for the debtor,

(b) the debtor's relevant obligations.

(5) The "debtor's relevant obligations" are-

(a)any obligation of aliment owed by the debtor ("obligation of aliment" having the same meaning as in the family law (scotland) act 1985 (c.37)),

(b) any obligation of the debtor to make a periodical allowance to a former spouse or former civil partner, and

(c)any obligation of the debtor to pay child support maintenance under the child support act 1991 (c.48).

(6) The amount allowed for the debtor's relevant obligations referred to in paragraphs (a) and (b) of subsection (5) need not be sufficient for compliance with a subsisting order or agreement as regards the aliment or periodical allowance.".

(2) In section 7(2) of the debt arrangement and attachment (scotland) act 2002 (asp 17) (debt payment programmes: power to make further provision), after paragraph (bc) insert-

"(bd) the method of assessing the amount of a debtor's assets, income, liabilities and expenditure in considering applications for the approval, or the variation, of a debt payment programme,".

S-4 Debtor contribution order

4 Debtor contribution order

After section 32 of the 1985 Act, insert-

"32A Debtor contribution order

(1)The Accountant in Bankruptcy must make an order fixing the debtor's contribution (a "debtor contribution order")-

(a) in the case of a debtor application, at the same time as awarding sequestration of the debtor's estate,

(b) in the case of an award of sequestration following a petition under section 5(2)(b), after considering initial proposals for the debtor's contribution provided by the trustee.

(2) In a case referred to in subsection (1)(b), the trustee must send initial proposals for the debtor's contribution before the end of the period of 6 weeks beginning with the date of award of sequestration.

(3) In making a debtor contribution order, the Accountant in Bankruptcy must use the common financial tool to assess the debtor's contribution.

(4) A debtor contribution order may fix the amount of the debtor's contribution as zero.

(5)A debtor contribution order may be made irrespective of sections 11 and 12 of the welfare reform and pensions act 1999 (c.30).

(6) A debtor contribution order may provide that a third person is to pay to the trustee a specified proportion of money due to the debtor by way of income.

(7) Where a third person pays a sum of money to the trustee in accordance with subsection (6), the third person is discharged from any liability to the debtor to the extent of the sum so paid.

(8)The Accountant in Bankruptcy must, immediately following the making of a debtor contribution order, give written notice of the order to-

(a) the debtor,

(b) the trustee, and

(c) any third person mentioned in the order.

(9) A debtor contribution order must not take effect on a date before the expiry of the period of 14 days beginning with the day of notification of the order.

32B Debtor contribution order: payment period and intervals

(1)A debtor contribution order must contain provision requiring the debtor to pay the debtor's contribution (if not zero)-

(a) during the payment period, and

(b) at regular intervals determined by the person making or varying the order.

(2)In subsection (1)(a), "payment period" means-

(a) the period of 48 months beginning with the date of the first payment,

(b) such shorter period as is determined by the person making or varying the order, or

(c)such longer period as is-

(i) determined by the trustee where there is...

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