Reformed bankruptcy law now in force

Reforms to Scotland's bankruptcy laws have come into force, under the Bankruptcy and Debt Advice (Scotland) Act 2014.

The Act introduces a suite of measures, including the minimal asset process, which offers debt relief quickly and at less than half the cost of an application for bankruptcy under the previous equivalent scheme for those on low incomes.

There will also be mandatory money advice for people seeking access to statutory debt relief procedures such as sequestration, and compulsory financial education for those who have been sequestrated more than once to help prevent future financial difficulties.

A "common financial tool" for money advisers will allow them to assess quickly whether individuals can contribute towards repayment of their debts and what the level of their contribution should be.

Creditors are now obliged to submit claims no later than 120 days after notification by the trustee.

Business Minister Fergus Ewing said: “These measures have been developed following years of consultation with experts across the financial advice community and from studying how other nations deal with issues of personal debt.

“It is only proper that we seek to do everything we can to help financially rehabilitate families and individuals on low incomes and with little by way of assets who are struggling with debt, while still offering a fair deal for those owed money.

“Taken as a whole, this pioneering legislation seeks to bring dignity to those people in Scotland seeking to break the cycle of debt once and for all.”