The Bankruptcy (Scotland) Regulations 2016

Made: 24th November 2016

Coming into force: 30th November 2016

The Scottish Ministers make the following Regulations in exercise of the powers conferred by sections 2(2)(a)(ii) and (f), 3(1), 4(1)(d) and (2)(b), 6(8), 8(3)(a), 9(4)(b), 19(1), 46(2)(a) and (6), 48(1)(a), 51(14), 54(4), 87(8), 89, 94(7), 113(5), 116(2), 117(1), 119(6)(a), 126(5), 129(10)(a), 137(2), 138(2), 140(2) 141(2)(a) and (c), 142(2) and (5), 200(1)(c) and (8), 221, 224(1), 225(2), 228(1), 234(3)(b) and paragraph 2(5)(a) of schedule 1 of the Bankruptcy (Scotland) Act 2016 (“the Act”), section 7(2)(bd) of the Debt Arrangement and Attachment (Scotland) Act 2002 (“the 2002 Act”) and all other powers enabling them to do so.

In accordance with section 225(4)(a) of the Act and section 62(4) of the 2002 Act , a draft of this instrument has been laid before and approved by resolution of the Scottish Parliament.

Citation and commencement

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These Regulations may be cited as the Bankruptcy (Scotland) Regulations 2016 and come into force on 30th November 2016.

Interpretation

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• (1) In these Regulations—

• “the Act” means the Bankruptcy (Scotland) Act 2016;

• “AiB” means the Accountant in Bankruptcy (with the meaning given by section 199 of the Act);

• “Common Financial Statement” means the style and format for income and expenditure categories under that title (and, where relevant, related spread sheets, budget sheets, trigger figures, guidance materials and notes) published by the Money Advice Trust ;

• “common financial tool” has the meaning given by section 89(1) of the Act (see regulations 15 to 17);

• “debtor's contribution” has the meaning given by section 89(1) of the Act; and

• “the Keeper” means the Keeper of the Registers of Scotland.

• (2) Any reference in these Regulations, except regulation 20, to anything done in writing or produced in written form includes a reference to an electronic communication, as defined in section 15(1) of the Electronic Communications Act 2000 , which has been recorded and is consequently capable of being reproduced.

Forms

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• (1) The forms set out in schedule 1 are the forms referred to in regulations 8, 12, 19, 20, 23, 24, 27 and 29, failing which they are prescribed for the purposes of the provisions of the Act referred to in the form.

• (2) Any signature required as shown on a form set out in schedule 1 must be provided ... by—

• (a) a manuscript signature; ...

• (b) except in Forms 19 to 21, an image of a manuscript signature sent electronically ; or

• (c) in any case, an electronic signature.

• (3) In paragraph (2), “electronic signature” (except where it relates to Form 9) is to be construed in accordance with section 7(2) of the Electronic Communications Act 2000 (electronic signatures and related certificates), but includes a version of an electronic signature which is reproduced on a paper document.

PART 1 — Money advisers

Approved categories of money advisers

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Subject to regulation 5, the following classes of persons are prescribed for the purposes of section 4(2)(b) of the Act as money advisers—

• (a) persons who—

• (i) are qualified to act as insolvency practitioners in accordance with sections 390 of the Insolvency Act 1986 who are fully authorised, or partially authorised so to act in relation to individuals, within the meaning of 390A of that Act ; or

• (ii) work for such an insolvency practitioner, who have been given authority by that insolvency practitioner to act on his or her behalf in providing money advice under the Act; and

• (b) persons who—

• (i) work as money advisers for organisations which have been awarded accreditation at Type 2 level or above against the Scottish National Standards for Information and Advice Provision; or

• (ii) are approved for the purposes of the Debt Arrangement Scheme ; or

• (iii) work as money advisers for a citizens advice bureau which is a full member of the Scottish Association of Citizens Advice Bureaux – Citizens Advice Scotland; or

• (iv) work as money advisers for a local authority.

Persons who may not be approved money advisers

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• (1) The following persons may not be a money adviser—

• (a) a sheriff officer or messenger-at-arms, or an employee of such a person;

• (b) a person or body providing financial services, or financial advice other than money advice, in the course of a business or otherwise for profit, or an employee of such a person, unless the person is a—

• (i) solicitor;

• (ii) chartered or certified accountant;

• (iii) a credit union registered under the Co-operative and Community Benefit Societies Act 2014 or the Industrial and Provident Societies Act 1965 by virtue of section 1 of the Credit Unions Act 1979 ;

• (c) a person providing debt collection services, or an employee of such a person;

• (d) a person convicted of an offence involving theft, fraud or other dishonesty;

• (e) a person subject to a bankruptcy restrictions order (including an interim order) under section 155 or 160 of the Act or subject to a bankruptcy restrictions order, or bound by a bankruptcy restrictions undertaking, under schedule 4A of the Insolvency Act 1986 ;

• (f) a person in respect of whom a court has made a disqualification order under section 1, or who has had a disqualification undertaking accepted under section 1A, of the Company Directors Disqualification Act 1986 ;

• (g) persons without a licence from the Money Advice Trust to use the Common Financial Statement; or

• (h) persons whose approval is revoked or suspended under paragraph (2).

• (2) AiB may revoke or suspend the approval of a money adviser who fails without good cause—

• (a) to apply the common financial tool in accordance with Part 3; or

• (b) to comply with regulation 7.

• (3) AiB must provide written notice of the revocation or suspension to the money adviser (together with reasons for the decision to revoke or suspend).

• (4) AiB must provide written notice of the revocation or suspension to any debtor where it is known to AiB that the money adviser is acting as money adviser to that debtor.

Other matters on which a debtor must obtain advice

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The following are prescribed for the purposes of section 4(1)(d) of the Act as matters on which the debtor must obtain advice from a money adviser—

• (a) the income and expenditure of the debtor in accordance with the common financial tool;

• (b) the evidence required to confirm the debts of the debtor in making the debtor application;

• (c) the debt advice and information package ;

• (d) the options of a voluntary repayment plan, debt payment programme under the Debt Arrangement Scheme or a trust deed;

• (e) the consequences of sequestration and that an award of sequestration, if granted, is recorded in a public register and may result in one or more of—

• (i) the debtor being refused credit, or being offered credit at a higher rate, whether before or after the date of the debtor being discharged;

• (ii) the debtor not being able to remain in his or her current place of residence;

• (iii) the debtor being required to relinquish property which the debtor owns;

• (iv) the debtor requiring to make contributions from income for the benefit of creditors;

• (v) damage to the debtor's business interests and employment prospects;

• (vi) the debtor still being liable for some debts;

• (vii) the debtor's past financial transactions being investigated; and

• (viii) other restrictions or requirements imposed on the debtor as a result of the debtor's own circumstances and actions.

Money advice on debtor applications: procedure on evidence and information

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• (1) In advising under section 4 of the Act on a debtor application, a money adviser must obtain evidence of the debtor's income and expenditure.

• (2) A money adviser must retain records in relation to the advice given to the debtor (including the evidence obtained under paragraph (1)) in making a debtor application, for 2 years from the date on which the advice was given.

• (3) A money adviser must provide as required by AiB, information about a debtor's application (including evidence obtained under paragraph (1) or the debtor's consent to the application).

Certificate for sequestration: form and manner

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• (1) A certificate for sequestration granted in accordance with section 9 of the Act must be in Form 2.

• (2) The certificate must be signed and dated to the effect provided in that form—

• (a) by the money adviser; and

• (b) by the debtor.

• (3) The certificate must be printed on the headed notepaper—

• (a) where the money adviser belongs to an organisation, of the organisation to which the money adviser belongs, or

• (b) in other cases, of the money adviser.

Certificate for sequestration: fee

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No fee is chargeable for granting a certificate for sequestration.

Certificate for sequestration: prescribed period

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The time period prescribed for a granted certificate for sequestration for the purposes of section 2(2)(f) or (8)(e)(ii) of the Act is 30 days.

PART 2 — Sequestration process

Debt advice and information package

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• (1) Subject to paragraph (2), the time prescribed for the purposes of section 3(1) of the Act is not less than 14 days before the presentation of the petition and not more than 12 weeks before the presentation of the petition.

• (2) Paragraph (1) (and so the requirement to provide the debtor with a debt advice and information package in that section) does not apply where it is averred that the address of the debtor is not known .

Debtor applications

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• (1) A debtor application to AiB—

• (a) in the case of an application by a living debtor, or by the executor (or a person entitled to be appointed executor) on the estate of a deceased debtor, must be in Form 1;

• (b) in the case of an application by an entity referred to in section 6(1) of the Act, must be in Form 3 accompanied by a statement of assets and liabilities in Form 4.

• (2) Where in a debtor application the debtor nominates an insolvency practitioner to act as the trustee in the sequestration and the insolvency practitioner agrees to act, the application must be accompanied by the insolvency practitioner's written undertaking to act as the trustee in Form 12.

• (3) The Accountant in Bankruptcy or Depute Accountant in Bankruptcy must daily sign a Schedule in Form 7 listing those debtors whose estates have been sequestrated that day, and must enter the Schedule into the register of insolvencies.

• (4) AiB must notify in writing debtors in respect of whom an award of sequestration has been made without delay after the award of sequestration.

• (5) Where AiB refuses to award sequestration, the Accountant in Bankruptcy or Depute Accountant in Bankruptcy must complete and sign a Form 8 in respect of the debtor and without delay send a copy to the applicant, or applicants, in the debtor application.

• (6) Where AiB awards sequestration the certified notice of the determination to be sent by AiB to the Keeper for recording in terms of section 26(2) of the Act must be in Form 9 and the certification is to be by the Accountant in Bankruptcy, Depute Accountant in Bankruptcy or any other person authorised by the Accountant in Bankruptcy to certify the notice of the determination on behalf of the Accountant in Bankruptcy.

• (7) A certified notice containing an electronic signature, in a form to be agreed between AiB and the Keeper, of a determination referred to in paragraph (6) may be sent by AiB to the Keeper electronically .

“Minimal Asset Process” debtors to whom section 2(2) of Act applies: prescribed payments

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• (1) The payments specified in paragraph (2) are prescribed for the purposes of section 2(2)(a)(ii) of the Act (criteria for sequestration where debtor has minimal assets).

• (2) Where the debtor has no other income (than from any of these payments) at the date of making his or her debtor application—

• (a) universal credit under Part 1 of the Welfare Reform Act 2012 ;

• (b) another income-related benefit (as defined in section 191 of the Social Security Administration Act 1992 );

• (c) an income-based jobseeker's allowance, as defined by section 1(4) of the Jobseekers Act 1995 ;

• (d) state pension credit under the State Pension Credit Act 2002 ;

• (e) child tax credit under the Tax Credits Act 2002 ; or

• (f) an income-related allowance under Part 1 of the Welfare Reform Act 2007 (employment and support).

“Minimal Asset Process” debtors to whom section 2(2) of Act applies: total assets

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The amount of £2,000 is prescribed for the purposes of paragraph 2(5)(a) of schedule 1 of the Act (total value of debtor's assets after date of debtor application for AiB duty to consider whether paragraph 1 of that schedule should cease to have effect).

PART 3 — Debtor's contribution

116Common financial tool

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• (1) The specified method to be used to assess the debtor's contribution in accordance with paragraphs (2) to (11) and regulations 16 and 17 (“the common financial tool”) is the Common Financial Statement.

• (2) Subject to paragraphs (3) and (7), the debtor's contribution is to be the debtor's whole surplus income (assessed for instance weekly, fortnightly or monthly in accordance with the Common Financial Statement) in excess of the lower of—

• (a) the trigger figures for a reasonable amount of the debtor's expenditure published from time to time as part of the Common Financial Statement; or

• (b) the debtor's expenditure over that period (for each relevant Common Financial Statement category of expenditure).

• (3) AiB, the trustee on variation or removal under section 95 of the Act, the court, or the trustee acting under a protected trust deed—

• (a) may allow an amount of expenditure to the debtor which exceeds those trigger figures if satisfied that the expenditure is reasonable; and

• (b) must allow the debtor to decide to retain an additional amount of income in accordance with regulation 16 towards contingencies which may arise.

• (4) In determining what is reasonable under paragraph (3)(a), evidence of why the expenditure is reasonable must be provided, or supplied by the debtor on request, to satisfy AiB, the trustee or court with regard to that evidence and any explanation provided.

• (5) Insofar as the income and expenditure of any other person may be taken into account in the Common Financial Statement, if either income or expenditure is so taken into account, both the income and the expenditure of that person must be taken into account.

• (6) In calculating the debtor's income where she or he is paid regularly by a period other than a week, fortnight or month, the debtor's income shall be the income for that period times such multiplier as converts the period into a year divided by 52, 26 or 12 as the case may be.

• (7) If the debtor has income solely from social security benefits and tax credits, no contribution is due.

• (8) If the expenditure amount so determined is 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 ) that income amount shall be allowed instead.

• (9) The expenditure amount determined under paragraph (3)(a) must be sufficient to allow for—

• (a) aliment for the debtor;

• (b) any obligation of aliment owed by the debtor (“obligation of aliment” having the same meaning as in the Family Law (Scotland) Act 1985 );

• (c) any obligation of the debtor to make a periodical allowance to a former spouse or former civil partner; and

• (d) any obligation of the debtor to pay child support maintenance under the Child Support Act 1991 .

• (10) The amount referred to in paragraph (9)(b) and (c) need not be sufficient for compliance with a subsisting order or agreement as regards the aliment or periodical allowance.

• (11) Any person applying the common financial tool must have regard to guidance issued by AiB on—

• (a) the treatment of types of income and expenditure under paragraph (3);

• (b) how income and expenditure are to be verified by the money adviser and the trustee; and

• (c) the conduct of money advisers in carrying out their functions under the Act in relation to the common financial tool.

Common financial tool: contingency allowance

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• (1) The amount of income which the debtor may decide to retain towards contingencies under regulation 15(3)(b) is—

• (a) up to 10% of the weekly, fortnightly or monthly (or the equivalent amount for another period) debtor's contribution assessed under regulation 15, before any calculation is made under this regulation for the purposes of regulation 15(3)(b);

• (b) subject to a maximum amount of £4.62 per week, £9.23 per fortnight, £20 per month or the equivalent maximum for such other period, as the case may be.