What is the Minimal Asset Process
Minimal Asset Process (MAP) bankruptcy was introduced in 2015 by the Bankruptcy and Debt Advice (Scotland) Act 2014. It replaced the previous Low Income Low Assets bankruptcy process. It is designed to allow clients with few or no assets a faster and easier route through the bankruptcy process. A MAP bankruptcy is suitable for client who cannot afford to pay back their debts within a reasonable time, or not at all, and have no disposable income and no assets.
There are no fees for a MAP application as the debtor contribution order (DCO) must be zero.
When a client wishes to apply for bankruptcy, the debt adviser decides whether to apply for MAP or Full Administration Bankruptcy (FAB). The Accountant in Bankruptcy (AiB) checks when the application is submitted to ensure all information and evidence has been provided and that the application meets the specific criteria.
MAP is a form of bankruptcy where specific criteria apply, and it has some advantages for the client over the FAB process.
Some advantages of MAP bankruptcy
MAP allows a client to write off up to 100 per cent of their qualifying debt while a trustee deals with creditors.
Creditors cannot take legal action against the client to recover their debt. This includes interest, fees and charges which are frozen.
Creditors can only claim for the outstanding balance due as at the date of sequestration.
It stops or removes the effect of any existing diligence such as wage arrestment, bank arrestment and deduction of earnings order.
The process is designed to be simpler, quicker and less onerous on the client.
Discharge of debts is six months, compared to 12 months for a FAB and 48 months for a protected trust deed.
Some disadvantages of MAP bankruptcy
Clients may find their employment prospects harmed.
Clients cannot act as a director of a limited company or be involved in the financial management of a limited company.
Clients cannot act as a MP or a Justice of the Peace.
The client’s credit rating will be adversely affected for six years.
For six months after discharge, if they apply for credit of £2,000 or more (or any amount if they owe debts of £1,000 or more), they must inform the creditor that they were bankrupt in the previous six months which may limit their access to credit.
They may be in breach of contractual obligations by being made bankrupt such as tenancy, car lease agreements and employment contracts. These have to be checked before recommending bankruptcy to a client.
Service providers (eg, gas or electricity suppliers) may change how they want to receive payments from the client by using a prepayment card or meter.
Banks may freeze or close accounts after a client is declared bankrupt.
Bankruptcy is recorded on the Register of Insolvencies for at least one year after discharge. It is a public register which is available for everyone to search.