In light of the coronavirus (COVID-19) pandemic, the Scottish Government introduced temporary legislative measures to provide additional support and protection to individuals facing financial difficulties and to assist those administering the insolvency process. AiB also introduced some temporary operational measures to help.
As the situation has evolved, some of these temporary measures have been made permanent with the remainder under review or removed for the changing situation.
In this section, we will provide on-going updates as they happen, including any changes to the service we provide and wider sector changes as a result of the pandemic. Please also follow us on twitter @AiB_updates for announcements.
The Scottish Government introduced two key Acts of Parliament, which included measures aimed at protecting those struggling with unsustainable debt.
These temporary measures are reviewed regularly and following discussions with stakeholders through Stage 1 of the Wider Review of Statutory Debt Solutions were made permanent through the Bankruptcy (Miscellaneous Amendments) (Scotland) Regulations 2021 which came into effect on 29 March 2021.
The specific proposals made permanent are as follows:
- Reduction of the Minimal Asset Process (MAP) debtor application fee to £50
- Reduction of the Full Administration Bankruptcy debtor application fee to £150
- Removal of all debtor application fees, where prescribed benefits are in payment at the date of application
- Increased debt threshold for access to MAP route into bankruptcy from £17,000 to £25,000
- Removal of student loans for consideration in the MAP debt threshold
- Enabling electronic signatures on applications for bankruptcy
- Increased timescale for a trustee to submit their initial debtor contribution proposal to AiB from 6 weeks to 12 weeks
Ongoing temporary measures
In June 2021, the Scottish Parliament approved the Coronavirus (Extension and Expiry) (Scotland) Bill 2021 which extended the temporary measures further.
The following measures will remain in place until 31 March 2022.
- Increased moratorium period from 6 weeks to 6 months
- Increased creditor petition debt level from £3,000 to £10,000
- Ability to hold virtual meetings of creditors in bankruptcy proceedings
- Ability to enable the electronic service of documents in bankruptcy proceedings
Provisions in this Bill allow the Scottish Parliament to extend these temporary measures beyond 31 March 2022 to 30 September 2022. Any decision to extend these will be subject to further reporting to the Scottish Parliament on the use of the provisions and whether they are still deemed to be necessary.
The moratorium period has temporarily been extended to 6 months. This measure will remain in place until 31 March 2022 with a provision to extend if considered necessary.
The provision which allowed more than one moratorium in a 12 month period was expired by the Coronavirus (extension and expiry) bill 2021 on 30 September 2021. The decision to not extend this provision further was taken as part of the regular review of temporary measures.
Debt Arrangement Scheme
Whilst legislative elements of the Debt Arrangement Scheme (DAS) remain in place, working changes were made to account for the situation.
A process was developed to allow DAS money advisers to submit a Low and Grow DAS application, where a DAS clients payments may be low to begin with, and increase by a specified date as their financial circumstances improved, thereby reducing the overall term of the programme.
The Low and Grow approach only applied to clients who are in financial difficulty but where the money adviser believes this to be temporary and a DPP is still the best long-term financial solution for the client. Full details can be found in the DAS guidance for advisers and creditors for DPP applications made under the Low and Grow process.
For all other information on DAS including guidance, forms and publications, visit the DAS section of the website.
Protected Trust Deeds
Within Protected Trust Deeds, several expanded contingencies arrangements were adopted to suit the circumstances at that time and provide support. See Dear Trustee of 20 March 2020 for more information.
As stated in the Dear Trustee letter of 5 July 2021, AiB will continue to accept electronic signatures on statutory forms and paperwork relating to PTDs.
Trustees will already be aware that Section 187 of the Bankruptcy (Scotland) Act allows any PTD notice or document to be sent electronically as long as the recipient has consented to this method.
The Coronavirus (Scotland) Act 2020 & The Coronavirus (Scotland) (No.2) Act 2020 made several key changes to expedite the bankruptcy administration process. Several of these measures are listed in the legisation section.
Another key element within the operational process that has been made permanent is reduced supporting evidence requirements with submission of debtor applications.
The period for trustees to seek a contribution order after the award of sequestration has been extendeed from 6 to 12 weeks.
In May 2020, action for property realisation was suspended, with trustees encouraged to show similar leniency. As we move into an economic recovery, AiB have ended the amnesty, effective from 30 August 2021, and property realisation action has recommenced. Further details can be found in the Dear Trustee letter of 5 July 2021.
Corporate insolvency cases
AiB are still accepting forms by email for corporate insolvency cases.
These should be sent to Insolvency Registration Team.