There are a number of conditions, which must be met before individual bankruptcy in Scotland can be declared:
Debtors must owe £1,500 or more
They must live in Scotland or have lived in Scotland in the last year
They must not have been made bankrupt in the last five years
A creditor is willing to agree to the debtor’s bankruptcy
The debtor is apparently insolvent
Bankruptcy in Scotland
Once the bankruptcy, sometimes called sequestration in Scotland, has been declared, the management of the debtor’s estate is transferred to a trustee who may be the Accountant in Bankruptcy or an insolvency practitioner.
The trustee will then arrange for the sale of the debtor’s assets and use the proceeds to pay the creditors and the costs involved in administering the bankruptcy. This will include a house and other property owned by the debtor. They are however generally allowed to keep the tools of their trade.
There are also other aspects of bankruptcy in Scotland that will have a direct and negative effect on a person’s life:
Notice of bankruptcy will remain on a credit file for at least six years making credit almost impossible to obtain
Banks must be made aware of a person’s bankruptcy and may decide to close or freeze the debtor’s account. Any savings will be transferred to the trusteeAnother, relatively recent, development in Scotland is the Low Income Low Asset (LILA) route Into bankruptcy, also administered by the Accountant in Bankruptcy.
Low Income
Low income means that people who wishes to declare themselves bankrupt must be earning £229.20 or less per week. This figure represents the minimum wage for a 40-hour week. Pensions and maintenance payments are taken into account when calculating income. However if the person is in receipt of Income Support, Jobseekers Allowance or Working Tax Credit and earns more than £229.20 per week they will still be considered as having met the low income conditions.
Low Assets
Low assets means that people who wish to declare themselves bankrupt must have no single asset worth more than £1000 and their total assets are worth £10,000 or less. They cannot own land or property either wholly or jointly.
In Scotland a debtor is normally discharged after one year and no longer has a liability to repay the debts they had before they were made bankrupt. (There are some exceptions).
Bankruptcy in Scotland is a matter of public record. Every bankruptcy is entered in the Register of Insolvencies and also in the Edinburgh Gazette, a publication that informs creditors and credit reference agencies that a person has been made bankrupt.
There are a number of organisations that people can turn to for money advice:
Citizens Advice ScotlandScottish DebtlineMoney Advice ScotlandConsumer Credit Counselling Service (CCCS)
Insolvency Practitioner
The information in the article is necessarily brief and any person contemplating bankruptcy in Scotland should contact a reliable insolvency practitioner or seek further information from the Accountant in Bankruptcy.
This article is compiled using journalistic research and is not offered as financial advice.
Source:
Accountant in Bankruptcy, website accessed 30 October 2009
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