Stage 1 is an immediate review to consider what action could be taken forward through legislation or guidance before the end of the current Parliamentary term.
During November 2020, stakeholder meetings were held to determine what should be included within stage 1. Included below are the notes from each of the meetings:
Update on the first stage of the review of Scotland’s statutory debt solutions
The Minister for Business, Fair Work and Skills, Jamie Hepburn has committed to the Scottish Government to take forward a wide-ranging review of Scotland’s debt solutions.
There has been a high level of stakeholder consultation on this review and at the Minister’s meeting with the Working Group on Statutory Debt Solutions on 26 October 2020 it was agreed that the review would be conducted in a three stage process. The first stage of this involved an examination of immediate priorities that could be taken forward during this Parliamentary session – specifically looking at measures that would help address the consequences of the COVID-19 pandemic.
A further series of five stakeholder meetings were held between 9 and 11 November. These meetings highlighted a number of areas of insolvency which should be changed immediately - making permanent some of the temporary changes introduced to help those struggling with debt during the pandemic.
These recommendations were put forward to Scottish Ministers and the Bankruptcy (Miscellaneous Amendments) (Scotland) Regulations 2021 have today been laid in Parliament.
The specific proposals which have been brought forward are outlined as follows:
- Reduction of the Minimal Asset Process (MAP) debtor application fee to £50
- Reduction of full administration bankruptcy application fee to £150
- Removal of all bankruptcy debtor application fees where prescribed benefits are in payment
- Increase in the debt threshold for access to the Minimal Asset Process route into bankruptcy from £17k to £25k
- Removal of student loans for consideration in the MAP debt threshold;
- Enablement of electronic signatures on applications for bankruptcy
- Increase the time scale for a trustee to submit their initial debtor contribution proposal to AiB from six weeks to 12 weeks
If approved by the Parliament they will come into effect from 29 March 2021.
The final proposal relating to debtor contribution order would bring the temporary provisions included in the Coronavirus Acts into bankruptcy law. This particular issue was considered as part of the recent consultation on the bankruptcy reforms made in 2015 where general consensus was that the timescale should be increased beyond six weeks. It is considered appropriate to make this change in legislation at the present time as it is entirely consistent with dealing with the response to the pandemic. However, it is recognised that this may require further consideration during the subsequent stages of the wider review.
Mr Hepburn has today also written to the Economy, Energy and Fair Work Committee and to members of the Ministerial Working Group on Statutory Debt Solutions providing a progress update. A copy of the letter to members can be found below.