The major changes are as follows:
A debtor (including individuals and partnerships) can now benefit from a 6 week period of protection from service of a charge for payment any diligence such as a bank arrestment, earnings arrestment, inhibition , attachment of their property or a creditor's petition for their sequestration (bankruptcy).
To get that protection the debtor simply needs to notify the Accountant in Bankruptcy of their intention to (a) apply for their own bankruptcy, (b) apply to enter the Debt Arrangement Scheme or (c) enter into a protected trust deed.
The 6 week protection will only be given to a debtor once in any 12 month period.
Transfer of powers from the court to the Accountant in Bankruptcy
A number of powers previously only available to a sheriff have now been transferred to the Accountant in Bankruptcy. This is in keeping with the administrative nature of many parts of the bankruptcy process.
The powers transferred include applications for recall of sequestration where the ground is that the debtor has paid or can pay his debts in full, conversion of a protected trust deed to a sequestration, sequestration of a deceased's estate and applications for a replacement trustee. The Accountant in Bankruptcy can now also grant Bankruptcy Restrictions Orders provided that the period of restriction does not exceed 5 years.
Provision is made for review of the Accountant in Bankruptcy's decisions with the possibility of a subsequent appeal to the Sheriff Court.
Debtors sequestrated after 1 April 2015 will not be automatically discharged following the expiry of 1 year from the date of their bankruptcy. Instead, ten months after the bankruptcy the trustee must report to the Accountant in Bankruptcy on whether or not the debtor should get his discharge. The trustee will report his view, alongside details of the estate, progress made in the sequestration and the debtor's co-operation or otherwise with the process, to the Accountant in Bankruptcy, sending copy to the debtor. The Accountant in Bankruptcy will then decide whether to grant the discharge, taking into account any representations made by the debtor. The debtor can seek a review of the decision and can ultimately appeal to the sheriff.
Advice & Education
Debtors will now be obliged to take money advice from an accredited money adviser before applying for their own sequestration. The advice given will be on (a) the debtor's circumstances; (b) the effect of the proposed sequestration on the debtor's estate; (c) the preparation of the application; and (d) advice on any other matters prescribed by the Scottish Ministers through regulation.
Following sequestration, certain debtors - including those who have already been sequestrated or have entered into a trust deed in the last 5 years- will require to undertake a compulsory financial education course before they can be discharged from the process.
Creditors' claims within 120 days
Creditors will now be compelled to lodge a claim with the trustee of a debtor within 120 days of being told by the trustee whether or not there will be a statutory meeting of creditors (or within 120 of days of being omitted from the list of creditors given that information). Failure to do so will mean that the creditor's claim will not be considered by the trustee. That 120 day period will only be extended in "exceptional circumstances" although there's no guidance on what that means as yet.
Beyond the changes highlighted above there are a raft of other changes which will also have a significant impact on the personal insolvency process, such as (i) the Accountant in Bankruptcy being able to reappoint a trustee to deal with assets the trustee had not previously discovered where the asset(s) is (a) worth more than £1000 and (b) discovered within 5 years of the date of sequestration; (ii) any assets acquired by the debtor within 4 years of the date of sequestration - including after discharge - will now vest in the trustee and (iii) the use of the Common Financial Tool (essentially a formula prescribed by the Scottish Government in Regulations) to assess whether any payments (known as contributions) should be made by the debtor towards his/her bankruptcy.