Notes for Guidance - Protected Trust Deeds - Bankruptcy (Scotland) Act 2016

If the trustee considers that a debtor has been affected by extenuating circumstances which are outwith the debtor's control, can no longer fulfil their obligations and there is no reasonable prospect of them being able to resume doing so before the end of the 48-month period, the trustee should consider seeking the debtor's discharge under section 184B of the Act.

For the purposes of section 184B, extenuating circumstances may include a condition, illness or other circumstance which prevents the debtor from fulfilling their obligations and where the available evidence demonstrates that there is no reasonable prospect of the debtor being able to resume compliance before the end of the contribution period.

Extenuating circumstances are not limited to health-related matters; however, a period of unemployment, in isolation and without any other relevant extenuating circumstances, would not normally justify an early discharge under section 184B.

Section 184B applies only where the extenuating circumstances affect the debtor. In all cases, the trustee must retain evidence supporting the basis for the proposed early discharge.

When assessing whether section 184B applies, the trustee must be satisfied that:

• the change in circumstances is outwith the debtor's control;
• the circumstances prevent the debtor from meeting their obligations; and
• the debtor will be unable to maintain payments for the remainder of the contribution period, with no reasonable prospect of resuming compliance before the end of the 48-month term

Where the trustee is satisfied that all of the above criteria are met, the trustee must give notice to all creditors detailing the basis on which section 184B is considered applicable and seek creditors' agreement to the debtor's discharge.

Creditors must be provided with sufficient information to enable an informed decision. Where appropriate, relevant supporting evidence should be shared. If the debtor does not consent to the sharing of personal or sensitive information, the trustee must nevertheless provide sufficient information to explain the circumstances, while retaining appropriate evidence to substantiate the proposed discharge.

If, within 21 days of the notice being issued, a majority in number or one-third in value of creditors consent to the proposal, the trustee must apply to the Accountant in Bankruptcy using Form 5 for registration of the debtor's discharge in the Register of Insolvencies.

Following registration, the Accountant in Bankruptcy will notify the trustee of the registration and the date of discharge. The trustee must notify the debtor and creditors of the discharge within 7 days of receiving that notification.

Where a majority in number or one-third in value of creditors object to the proposal, the trustee must apply to the Accountant in Bankruptcy for a review of the proposal in accordance with section 9.3.