Legislation Update - The Bankruptcy (Miscellaneous Amendments) (Scotland) Regulations 2021

As a response to the unfolding coronavirus pandemic, and the subsequent negative impact this was having on the finances of both individuals and companies across Scotland, a series of emergency Acts were put in place to help mitigate the financial fallout.

Changes were made to the existing MAP and full administration sequestration process as part of the Coronavirus (Scotland) (No. 2) Act 2020 which, amongst other measures, reduced the application fees for both MAP and full administration bankruptcy, increased the debt threshold for MAP cases, and waived application fees for those in receipt of certain benefits. Taken together, these measures not only make the eligibility criteria less strict, but they also reduce costs to individuals looking to enter into an insolvency process.

Brought in as a temporary measure, these emergency provisions are due to expire at the end of March 2021; however, it has now been suggested that some of these adjustments to existing legislation should be made permanent as part of as the Bankruptcy (Miscellaneous Amendments) (Scotland) Regulations 2021.

The specific proposals which have been brought forward and recommended to be made permanent are:

• Bankruptcy applications fees reduced to £150 for full administration cases and £50 for Minimal Asset Process (MAP) cases;
• Remove bankruptcy application fees for those individuals in receipt of prescribed benefits;
• Increase in the debt threshold for MAP cases to £25,000 from its current level of £17,000;
• Remove student loans from the debt threshold calculation when assessing MAP cases;
• Allowing the electronic signature of bankruptcy forms;
• Increase the time scale for a trustee to submit their initial debtor contribution proposal to AiB from six weeks to 12 weeks.

Should these provisions pass through Parliament, the hope is that it will make both full administration bankruptcy and MAP bankruptcy more accessible to those requiring help with their personal financial position long after the Covid-19 pandemic has passed.

These measures are not as of yet permanent; however, they are working their way through Parliament and should approval be granted, the above-mentioned provisions will become permanent as of 29 March 2021.