Newer version available

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Debt Advice Handbook Scotland 1st ed - with new material

Assets general

• Heritable property (the client's home)
• Vehicles
• Insurance policies

Consideration of the valuation of assets is important if clients are considering statutory insolvency solutions as these may vest or be conveyed to the trustee.

Heritable property (the client’s home)

Before establishing if a debt solution is the appropriate action, the equity position of the client’s property should be ascertained. This allows the client to obtain a realistic valuation and potentially safeguard their home.

If a client enters into the DAS, the property is excluded from the arrangement and a valuation is not required.

Vehicles

A valuation of the client’s vehicle(s) should be obtained from an independent recognised source such as Parker’s guide, mycarcheck, autotrader or on headed paper from a car dealership/garage. The AiB may also obtain a vehicle valuation.

The AiB does not accept valuations from Webuyanycar, Arnold Clark, Motorway or any company that provides quick access to cash from a vehicle sale.

If the valuation is lower than could be expected for the make, model and year of the vehicle (eg, due to damage or or high mileage), an explanation for the low valuation and the source of the valuation must be provided. Additionally, debt advisers/trustees should confirm why the use of the vehicle is required. This could include the need to travel to work or that a vehicle required for a specific reason such as ill health impacting on mobility. Other factors can also be taken into account – eg, rural locations and access to amenities and shops.

The valuation of a vehicle is important as bankruptcy legislation only provides for clients to retain ownership of a vehicle of up to £3,000 in value and where it is reasonably required. Incorrect advice at the outset may result in the vehicle being sold by the trustee in bankruptcy.

Insurance policies

Debt advisers/trustees must obtain documentary evidence of all insurance policies held and establish whether there is any immediate realisation value. The onus is on the client to clarify the position. The surrender value of any life insurance policy must be established before a bankruptcy application. If the surrender value exceeds £1,000, the client is not eligible for bankruptcy through the Minimal Asset Process (MAP) route.

Maintenance of insurance policies is acceptable if each policy is relevant and the cost is not excessive. Clients should be advised that if insurance policy premium costs are excessive, they may be asked to pay a higher contribution.

Note that advice on changing life insurance cover provision or disposing of an insurance policy falls within the boundary of regulated financial advice and therefore outside the remit of advice from debt advisers/trustees. If the client has queries about their life insurance policies, they should be referred to an appropriate adviser.