Bankruptcy and Diligence (Scotland) Act 2024

Mental health moratorium

Moratorium on debt recovery action: debtors who have a mental illness

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• (1) The Scottish Ministers must by regulations make provision establishing a moratorium on debt recovery action by creditors against individuals who have a mental illness.

• (2) Regulations under subsection (1) may (among other things) include provision about—

• (a) the eligibility criteria, or conditions, which must be met for the moratorium to apply in relation to an individual,

• (b) the types of debts in respect of which the moratorium applies,

• (c) the process for determining if the eligibility criteria, or conditions, are met (for example, by conferring functions on a person or persons of a description specified in the regulations),

• (d) the time period for which the moratorium is to apply in relation to an individual (“the moratorium period”),

• (e) the actions creditors must, may or may not take during the moratorium period in relation to an individual who is the subject of the moratorium and the consequences (if any) for creditors for taking or failing to take such actions,

• (f) the obligations on an individual who is the subject of the moratorium during the moratorium period,

• (g) the arrangements for the recording of, and access to, information that the moratorium is applying in relation to an individual,

• (h) appeals against decisions made under the regulations,

• (i) the obligations, or restrictions, on an individual or creditors following the end of the moratorium period.

• (3) Regulations under this section may—

• (a) make different provision for different purposes,

• (b) modify any enactment,

• (c) include incidental, supplementary, consequential, transitional, transitory or saving provision.

• (4) Regulations under this section are subject to the affirmative procedure.

Procedure for first regulations under section 1

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• (1) The Scottish Ministers must, before laying a draft of a Scottish statutory instrument containing the first regulations under section 1 before the Scottish Parliament—

• (a) lay a copy of the proposed draft regulations before the Scottish Parliament for a period of 60 days,

• (b) have regard to any representations about the proposed draft regulations that are made to them.

• (2) When laying a draft of a Scottish statutory instrument containing the first regulations under section 1, the Scottish Ministers must also lay before the Scottish Parliament a statement setting out—

• (a) details of any representations mentioned in subsection (1)(b),

• (b) the changes (if any) they have made to the regulations in response to such representations and their reasons for making them.

• (3) In calculating any period of 60 days for the purposes of subsection (1), no account is to be taken of any time during which the Parliament is dissolved or is in recess for more than 4 days.

Review of mental health moratorium

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• (1) The Scottish Ministers must, as soon as reasonably practicable after the end of the review period—

• (a) undertake a review of the operation of the mental health moratorium established under section 1,

• (b) prepare a report on that review.

• (2) The Scottish Ministers must, as soon as reasonably practicable after preparing the report—

• (a) publish the report, and

• (b) lay the report before the Scottish Parliament.

• (3) For the purposes of this section, “the review period” is the period of 5 years beginning with the day on which the first regulations under section 1 come into force.

Modification of the Bankruptcy (Scotland) Act 2016

Process for applying for recall of an award of sequestration

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• (1) Part 2 of the Bankruptcy (Scotland) Act 2016 is modified as follows.

• (2) In section 29 (petitions for recall of sequestration), in subsection (4)—

• (a) in paragraph (a), after “debtor” insert “(where the debtor is not the petitioner)”,

• (b) in paragraph (b), after “any” insert “other”,

• (c) in paragraph (c), after “trustee” insert “(where the trustee is not the petitioner)”,

• (d) in paragraph (d), after “AiB” insert “(where AiB is not the petitioner)”.

• (3) In section 31 (application to Accountant in Bankruptcy for recall of sequestration)—

• (a) in subsection (3), in the opening words, before “persons” insert “other”,

• (b) in subsection (4)—

• (i) in paragraph (a), the words “(where the debtor is not the applicant)” are repealed,

• (ii) in paragraph (c), after “trustee” insert “(where AiB is not the trustee)”,

• (c) in subsection (5)—

• (i) after “granted” insert

— (a) where AiB is not the trustee,

,

• (ii) at the end insert—

(b) where AiB is the trustee, under section 35(6) (subject to any conditions imposed under section 35(6B)).

.

• (4) In section 32 (application under section 31: further procedure)—

• (a) for subsection (1) substitute—

(1) This section applies where— (a) an application is made under section 31, and (b) AiB is not the trustee.

,

• (b) the heading of the section becomes “Application under section 31: further procedure where Accountant in Bankruptcy is not trustee”.

• (5) In section 33 (determination where amount of outlays and remuneration not agreed), in subsection (1)—

• (a) the word “and” immediately following paragraph (a) is repealed,

• (b) after paragraph (a), insert—

(aa) AiB is not the trustee, and

.

• (6) In section 34 (recall of sequestration by Accountant in Bankruptcy)—

• (a) before subsection (1), insert—

(A1) This section applies where AiB is not the trustee.

,

• (b) after subsection (1), insert—

(1A) Before recalling an award of sequestration AiB must take into account any representations made by an interested person within 21 days beginning with the day on which notice is given under section 31(3)(b).

,

• (c) in subsection (2)(a), for “8 weeks” substitute “9 weeks”,

• (d) the title to the section becomes “Recall of sequestration where Accountant in Bankruptcy is not trustee”.

• (7) In section 35 (recall where Accountant in Bankruptcy trustee)—

• (a) in subsection (1)(b)—

• (i) before “considers” insert

either— (i) receives an application under section 31, or (ii)

,

• (ii) for “should” substitute “may”,

• (b) in subsection (2), after “must” insert

— (a) where an application under section 31 is received, notify every creditor known to AiB that the application has been made within 7 days beginning with the day on which the application is received, (b) where AiB is acting on its own accord,

,

• (c) after subsection (2), insert—

(2A) At the same time as giving notice under subsection (2)(b), AiB must give to the persons mentioned in subsection (2B) a notice informing the recipient that the person has a right to make representations to AiB in relation to the notification within 21 days beginning with the day on which the notice is given. (2B) The persons are— (a) the debtor, and (b) any person who was a petitioner for, or concurred in a debtor application for, the sequestration.

,

• (d) in subsection (5)(a), for “subsection (2)” substitute “subsection (2A) or, as the case may be, section 31(3)(b)”,

• (e) after subsection (6), insert—

(6A) AiB may not recall an award of sequestration after— (a) where no appeal is made under section 37(5)(a), the day which is 9 weeks after the days mentioned in subsection (5)(a) have expired, or (b) where such an appeal is made, such later day which is 14 days after the day on which the appeal is finally determined or abandoned. (6B) If AiB does not under subsection (6) recall an award of sequestration, the sequestration must continue but is to be subject to such conditions as AiB thinks fit. (6C) Despite notice being given under subsection (2)(b), the proceedings in the sequestration are to continue as if the notification had not been made until a recall of an award of sequestration is granted under subsection (6) (subject to any conditions imposed under subsection (6B)).

,

• (f) the heading of the section becomes “Recall of sequestration where Accountant in Bankruptcy is trustee”.

Recall of sequestration: payment of interest

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• (1) Part 2 of the Bankruptcy (Scotland) Act 2016 is modified as follows.

• (2) In section 30 (recall of sequestration by sheriff)—

• (a) in subsection (2), in paragraph (a), after “full” insert “(including the payment of any interest payable on the debtor’s debts and the payment of the outlays and remuneration of the interim trustee and of the trustee)”, and

• (b) in subsection (4), in paragraph (a), after “full of” insert

— (i) any interest payable on the debtor’s debts (see section 37A), and (ii)

.

• (3) In section 32(4) (application under section 31: further procedure)—

• (a) in paragraph (b), for “(including” to the end of that paragraph substitute

, including the payment in full of— (i) any interest payable on the debtor’s debts (see section 37A), (ii) the outlays and remuneration of the interim trustee and of the trustee,

, and

• (b) in paragraph (c)(ii), after “payment of” insert “any interest payable on the debtor’s debts and payment of”.

• (4) In section 34(1) (recall of sequestration by Accountant in Bankruptcy), in paragraph (a), for “(including the outlays and remuneration of the interim trustee and the trustee)” substitute

, including the payment in full of— (i) any interest payable on the debtor’s debts (see section 37A), (ii) the outlays and remuneration of the interim trustee and of the trustee,

.

• (5) In section 35 (recall where Accountant in Bankruptcy trustee)—

• (a) in subsection (1), in paragraph (b), after “including” insert “the payment of any interest payable on the debtor’s debts and the payment of”, and

• (b) in subsection (6), in paragraph (a), for “(including” to the end of that paragraph substitute

, including the payment in full of— (i) any interest payable on the debtor’s debts (see section 37A), (ii) the outlays and remuneration of the interim trustee and of the trustee,

.

• (6) After section 37, insert—

(37A) (1) This section applies for the purpose of determining the amount of interest payable on the debtor’s debts in relation to a recall of an award of sequestration. (2) Interest, between the date of sequestration and the date of payment of the debt, is payable at the rate specified in section 129(10), unless subsection (3) applies. (3) This subsection applies if the whole of the debt is paid in full within 6 months after the date of the award of sequestration, in which case interest is not payable on the debt. (4) For the avoidance of doubt, if only part of the debt is paid within 6 months after the date of the award of sequestration, interest is payable on the whole of the debt (including any part of the debt already paid since the award) in accordance with subsection (2).

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When sequestration is awarded: minimal asset process

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• (1) Section 22 (when sequestration is awarded) of the Bankruptcy (Scotland) Act 2016 is modified as follows.

• (2) In subsection (1)(b), for “2(8)” substitute “2(2) or (8)”.

Petition for sequestration: citation of debtor

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• (1) Section 22 (when sequestration is awarded) of the Bankruptcy (Scotland) Act 2016 is modified as follows.

• (2) For subsection (4) substitute—

(4) The debtor must be cited no fewer than 6 days before the date specified under subsection (3).

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Gratuitous alienations: right acquired in good faith and for value

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• (1) Section 98 (gratuitous alienations) of the Bankruptcy (Scotland) Act 2016 is modified as follows.

• (2) In subsection (7), for “(6)” substitute “(5)”.

Time periods for appeals against decisions by AiB

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• (1) The Bankruptcy (Scotland) Act 2016 is modified as follows.

• (2) In section 69 (resignation or death of trustee)—

• (a) in subsection (9), for “subsection (11)” substitute “subsections (11) and (12)”,

• (b) for subsection (12) substitute—

(12) T or T's representatives, NT, the debtor or any creditor may, within 14 days beginning with the date of any decision of AiB in an appeal under subsection (11)(a), appeal to the sheriff against that decision.

.

• (3) In section 134 (appeal against determination as to outlays and remuneration payable to trustee)—

• (a) for subsection (3) substitute—

(3) The trustee, the debtor or any creditor may, within 14 days beginning with the date of any decision of AiB in an appeal under subsection (1)(a), appeal to the sheriff against that decision.

,

• (b) in subsection (4), after “(1)” insert “or (3)”,

• (c) after subsection (5), insert—

(6) The decision of the sheriff on an appeal under subsection (1)(b) or (3) is final.

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Protected trust deeds: information and time to be provided to debtor

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• (1) Part 14 of the Bankruptcy (Scotland) Act 2016 is modified as follows.

• (2) In section 167 (statements in and advice regarding trust deed)—

• (a) in subsection (3), for paragraph (b) substitute—

(b) the trustee must provide the debtor with— (i) a copy of a debt advice and information package, and (ii) a copy of a trust deed information document, (ba) the trustee must give the debtor adequate time to consider the advice and material provided under paragraphs (a) and (b),

, and

• (b) after subsection (3), insert—

(4) For the purposes of subsection (3) a “trust deed information document” means a document containing such information (including information regarding the consequences of granting a trust deed), and in such form, as the Scottish Ministers may determine. (5) The trustee must have regard to any guidance issued by the Scottish Ministers about giving debtors adequate time to consider the advice and material provided under paragraphs (a) and (b) of subsection (3). (6) The Scottish Ministers must publish any guidance issued under subsection (5).

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Debtor not traced: former trustee’s outlays and remuneration

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• (1) Section 142 (debtor not traced: new trustee) of the Bankruptcy (Scotland) Act 2016 is modified as follows.

• (2) In subsection (6)(c), after “133” insert “(there being no effect on any outlays and remuneration paid to the former trustee before the issue of the notice)”.

Failure of debtor to co-operate with trustee in sequestration

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• (1) The Bankruptcy (Scotland) Act 2016 is modified by subsections (2) and (3).

• (2) After section 147, insert—