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Low Income, Low Assets - A new route into bankruptcy: Consultation on proposed regulations

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Annex B - New provision for Debtors' Petitions

Rules on debtors' petitions are set out in section 5 of the Bankruptcy (Scotland) Act 1985. These rules will be amended by the provisions introduced by the Bankruptcy and Diligence etc. (Scotland) Act 2007. Subject to Parliamentary approval, it is anticipated that these amendments will come into force in December 2007.

(1) A debtor will be able to apply to the Accountant in Bankruptcy if creditors who are owed a total debt of at least £3000 are willing to agree to the petition.

(2) A debtor will also be able to apply to the Accountant in Bankruptcy if -

  • They owe total debts of at least £3000
  • They were not sequestrated in the previous 5 years, and
  • They are Apparently Insolvent or their creditors have rejected a proposal for a Protected Trust Deed.

(3) And under the Low Income Low Assets Scheme, a debtor will also be able to apply to the Accountant in Bankruptcy if -

  • They owe total debts of at least £3000
  • They were not sequestrated in the previous 5 years, and
  • They satisfy conditions of the Low Income Low Assets Scheme.

The conditions of the Low Income Low Assets Scheme will be set out in a new section 5A inserted in the 1985 Act and in a new set of Regulations.

The Accountant in Bankruptcy will award bankruptcy if satisfied that a debtor's application has been properly made and will appoint a Trustee to administer the debtor's estate. For Low Income Low Asset applications, the Accountant will be deemed to be appointed as Trustee in all cases.