Today is the day the Bankruptcy & Debt Advice (Scotland) Act (or BADAS as it’s more commonly referred) introduces new legislation to debt advice, a new route into bankruptcy amongst other brand spanking new changes.
So what’s changed?
• MAP or ‘Diet Bankruptcy’ as I like to call it
A new route into bankruptcy for those who are on benefits or those who do not earn enough to allow them to make a contribution to their debts. The fee for this application is £90, less than half of the £200 it will cost you to apply for ‘full fat Sequestration’ at £200. You must also not own any property or land, you can’t have any assets worth more than £1,000 and all your assets together can’t be worth more than £2,000. This replaces the old LILA route.
You will be eligible if you have a car worth more than £1,000 as long as it doesn’t value at more than £3,000. Keeping up?
• Money Advice from an approved money adviser has become mandatory for those entering Bankruptcy.
Hallelujah!! This will ensure, if you make yourself bankrupt, you can be certain that it is the correct way to deal with your debt and you’ve been given all options available which suit your personal circumstances.
• Compulsory financial education for those who have entered bankruptcy twice or more.
This isn’t a punishment for getting into debt you can no longer pay, it’s to ensure it doesn’t keep happening and to give you a helping hand in dealing with your finances if you need it.
• Introduction of the Common Financial Tool
A tool which allows money advisers to work out how much you should be paying back towards your debts, based on your income and expenditure. The expenditure is set using industry guidelines of what constitutes “reasonable expenditure” based on your circumstances. For example, if you live alone, you won’t be allowed to put down £600 a month on food however someone with 4 children will be.
This will ensure that there is transparency and fairness across the board. It should also remove “shopping around” for the lowest payment which is not in the spirit of the debt relief options available to consumers. It’s not a loan you’re applying for!
• Step aside paper, it’s going online
Your bankruptcy application will be done on-line by you and your money adviser. This will make the process more streamline and save a few trees along the way.
Every little helps! Sorry Tesco!
Save all the Trees!!
• Creditors are obliged to submit claims within 120 days after the Trustee notifies them on the insolvency. This may not seem like a big deal but trust me, if you are desperate for your insolvency to be done and dusted so you can move on with your life, a creditor holding up the closure process because they haven’t submitted a claim 3 years later will become a big deal.
And now a quick word from our Business Minister Fergus Ewing;-
“This new law places Scotland firmly at the forefront of efforts on how to help some of the most financially vulnerable in society. These measures have been developed following years of consultation with experts across the financial advice community and from studying how other nations deal with issues of personal debt.
It is only proper that we seek to do everything we can to help financially rehabilitate families and individuals on low incomes with little by way of assets who are struggling with debt, while still offering a fair deal for those owed money.
Taken as a whole, this pioneering legislation seeks to bring dignity to those people of Scotland seeking to break the cycle of debt once and for all”.