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.

In all cases, the trustee must retain evidence supporting the basis for the proposed early discharge.

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 make an informed decision and, where appropriate, relevant supporting evidence should be shared. If the debtor does not consent to the disclosure of personal or sensitive information, that information should not be shared with creditors. 

In such cases, the trustee should provide sufficient non-sensitive information to explain the circumstances and basis for the proposed discharge, and retain appropriate evidence to support the decision.

Unless the proposal has been objected to by a majority in number of creditors, or by creditors representing one-third or more in value of the debt, the trustee must apply to the Accountant in Bankruptcy using Form 5 to register the debtor’s discharge in the Register of Insolvencies once the 21-day notice period has expired.

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 within 21 days, the trustee must apply to the Accountant in Bankruptcy for a review of the proposal within 14 days of the end of the 21 day period, as per Section 184C of The Act. See Section 9.3.