Summary of bankruptcy reforms in Scotland
The Bankruptcy and Diligence etc. (Scotland) Act 2007 received Royal Assent on 15 January 2007. The main changes introduced by the Bankruptcy Part of the Act from 1 April 2008 are –
Debtors will be discharged from bankruptcy after one year instead of three years
There will be a power to impose Bankruptcy Restrictions for up to 15 years if the debtor’s conduct, before or after the award of sequestration (the date they become bankrupt), indicates that some form of further restriction is in the public interest.
Debtors will apply to AiB instead of the Sheriff Court for their own bankruptcy
There will be a new route into bankruptcy for debtors with low income and low assets (LILA) from 1 April 2008
A debtor’s family home will be reinvested if their Trustee does not begin action to sell it within three years of the award of sequestration (the date they become bankrupt)
The debt threshold for bankruptcy will increase to £3000 for creditors but will remain £1500 for debtors
A debtors potential interest in a Will or Trust will be reinvested when they are discharged from bankruptcy
Student Loans will not be written off by bankruptcy.
Debts under summary warrant procedure (such as council tex arrears) will now only be enforceable following a 'charge for payment' and will be subject to the time to pay provisions under the Debtors (Scotland) Act 1987.
The relevant regulations (Scottish Statutory Instruments) in force from 1 April 2008 are as follows: