Bankruptcy

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Bankruptcy Diligence etc. (Scotland) Act 2007
Pauline Allan
SERVICES FOR COMMUNITIES
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• The Bankruptcy Diligence etc. (Scotland) Act
  2007 received Royal Assent in January 2007 and it
  is the largest piece of legislation made by the
  Scottish Parliament to date.

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• The Act introduces modernisation of bankruptcy
  law in Scotland plus modifications to the
  administration of Trust Deeds and changes to
  aspects of debt enforcement through processes
  known as diligence.

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Concentrate on Part 1 which introduces amendments
to the Bankruptcy (Scotland) Act 1985.

• Main changes
• Person applies to Accountant in Bankruptcy not
  Sheriff Court
• Application packs are available from AIB and
  Advisers
• Pack headed Application Pack 1 (without
  concurrence of qualified creditors)
• Person must owe at least 1,500
• Person will be discharged after one year (however
  this period can be extended if someone does not
  co-operate with Trustee or misbehaves)
• New fee of 100
• Student loans will not be written off
• A Trustee will be appointed Trustees no longer
  need to be resident in Scotland
• Bankruptcy restrictions may be imposed on people
  who do not co-operate - can be extended after
  discharge BROs/BRUs

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New Route Into Bankruptcy

• L.I.L.A

Low Income Low Assets
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L.I.L.A

• To allow debt relief on grounds of low
  income, low assets. Low income means not more
  than 220.80 per week, i.e. standard national
  minimum wage for 40 hours . Low asset means no
  single assets worth more than 1,000
• Person must owe 1,500 or more
• Apply on Debt Application Pack 1
• Person cannot be a homeowner
• No need to establish apparent insolvency
• AIB must be Trustee in all LILA Cases

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Anyone on Income Support Income Based Job
Seekers Allowance Working Tax Credits qualify
EVEN if income is more than 220.80No account
will be taken of any other Social Security
benefits or Tax CreditsStill require 100 to
apply
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Paying for Bankruptcy Application

• Payment by post Postal Orders or cheques to AIB
  with name and address on back
• Payment in person at AIB offices in Kilwinning
• Payment at bank Royal Bank of Scotland
  (specific account number and sort code) receipt
  to be sent with application pack
• NOT BY CREDIT CARD

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Additional Information

• If a person has been bankrupt in Scotland in last
  five years cannot do so again until five years
  are over
• 220.80 before deductions for Tax, NI etc dont
  include Social Security benefits or Tax Credits
  NOR any partners income in household
• Unlikely that contributions will be asked for in
  LILA cases but could have one year extended for
  non co-operation or misbehaviour

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In Creditor Petitions

• Creditors must provide debt advice and
  information package prior to petitioning for
  sequestration
• An un-discharged bankrupt can have credit up to
  500 without having to inform credit supplier of
  his status (previously 250)
• Local Authorities must serve debtor with Charge
  for Payment before undertaking an earnings
  arrestment or attachment