1. Introduction
There are three types of personal insolvency in Scotland which a client can access. There are two bankruptcy options (Full Administration Bankruptcy (FAB) and the Minimal Asset Process (MAP)) and one voluntary arrangement (protected trust deed (PTD)). There are specific rules for each, and general rules that cover all three. The general rules are in section 9 of this chapter.
There are also creditors’ petitions where the creditor can petition the sheriff court for a client’s bankruptcy.
The Debt Arrangement Scheme (DAS) is not an insolvency option but allows the client to pay their debt off over a reasonable period and will freeze any additional interest or charges.
When making an application for MAP, FAB, DAS and PTD, debt advisers and insolvency practitioners are obliged to use the common financial tool (CFT) to assess a client’s financial situation and their ability to contribute.
Note that bankruptcy is often referred to as ‘sequestration’ in Scotland and both terms are interchangeable.
Notes for advisers
The legislation and regulations around bankruptcy can be difficult to go through.
The Bankruptcy (Scotland) Act 2016 and the Bankruptcy (Scotland) Regulations 2016 cover most of the laws of bankruptcy in Scotland.
Although essential in the debt adviser’s day-to-day work, we would recommend that an adviser starts with the AiB guidance for Trustees.
This is an accessible document and covers most of the issues that arise on a case-by-case basis.
MATRICS learn has several e-learning modules on all forms of insolvency and an online class that Scottish advisers can access.
The AiB is an excellent source of information and guidance. Do not be afraid to give them a call or send them an email if you are unsure about any aspect of the insolvency process, MAP, FAB or PTD.
MATRICS is also on hand if you need to discuss a case.