Bankruptcy and Debt Advice (Scotland) Act John Cook

Background Consultation in spring 2012 BADAS Bill introduced to Parliament June 2013 Completed Stage 3 in March and became an Act at end April Will come into force in April 2015

Overview of the Act Creates the framework for a Financial Health Service for Scotland. It aims to ensure that people have access to the best solution for their circumstances It provides a common approach to the assessment of surplus income and seeks a fair contribution from those who can pay It provides a new route into bankruptcy – Minimal Asset Process

Advice Application for sequestration only if advice has been given by an approved money adviser Application must now include a declaration by the adviser that advice has been given A definition of who can act as money adviser will be detailed by Regulations

Education Provides for Regulations to set appropriate courses of financial education for debtors whose financial history and circumstances Identify them as vulnerable to recurring debts Content, format and delivery of the education will be set out in Regulations

Payments by Debtor Power to provide a common financial tool for assessing a debtor’s income, allowed expenditure and debtor’s contribution Debtor required to undertake to pay the contribution determined by the common financial tool Standard period of contribution – 48 months New ‘debtor contribution order’ replaces Income Payment Order. New payment break of up to 6 months

Minimal Asset Process New Minimal Asset Process (MAP) – replaces LILA Assessed as not able to make a contribution or has been on benefits for at least 6 months Debts of at least £1,500 but no more than £17,000 Total assets do not exceed £2,000 and no single asset of more than £1,000 (except car, up to £3,000) and no land owned 6 month discharge Once in 10 year access to MAP

Moratorium on Diligence A new moratorium will apply on giving notice of intention to apply for a statutory debt solution Details will be entered by AiB on RoI and DAS Register Protected for 6 weeks No arrestment, money attachment, interim attachment or attachment of estate can have effect during this period Only one intimation in a 12 month period

Discharge Automatic discharge in MAP after 6 months In other cases, Trustee must automatically report to AiB at 10 month point. AiB will make decision on discharge Only those who have not complied will have discharge delayed. Expect most discharges to be at 12 month point. Appeal to Sheriff if debtor disputes Discharge delayed indefinitely if debtor cannot be traced

Functions of sheriff and AiB Administrative procedures passing to AiB from sheriff A few examples – application by a Trustee for Direction Recall of sequestration where debts can be paid in full Appointment of replacement Trustee Bankruptcy Restrictions for less than 5 years Curing defects

Review of decisions by AiB AiB will have a new Review function in relating to some of its decisions: Interim trustee functions Award of bankruptcy Replacement trustee Adjudication of creditors claims Discharge of Trustee or Debtor

In order to support the new Act, a new case management system is under development – BASYS (Bankruptcy Administration System). Key points: Web-based system Integration of Common Financial Tool Electronic submission of Bankruptcy applications Increased capability for electronic transactions BASYS will ‘go live’ from April 2015 AiB’s New Case Management System

Access will be granted to external users AiB will run a training exercise Forms will be validated to prevent incomplete or erroneous completion Input will be sought from external users on functionality Work has commenced and first iteration of the development has been released for testing Working with BASYS

User login

Common Financial Tool dashboard

Debtor details

Income details

John Cook, Executive Director, Case Operations , 1 Pennyburn Road, Kilwinning, Ayrshire, KA13 6SA T F W THANK YOU