Bankruptcy and Diligence (Scotland) Bill: business and regulatory impact assessment

Benefits

Option 1

31. Do nothing. The benefit of option 1 is that the status quo will be retained, with the effect that current practice and procedure for affected parties will not require to be amended.

Option 2

32. Introduce the draft Bill. There are significantly more benefits if option 2 is taken forward. The implementation of option 2 will see the introduction of an enabling power which will allow for regulations to create additional protections for debtors who are experiencing serious mental health issues in the form of a mental health moratorium. This will give them protection from creditors taking action to recover debts while they are focusing on treatment for, or recovery from, serious mental illness. The introduction of such a moratorium is seen as a positive step by stakeholders and those in the mental health sector. It is noteworthy that the Impact Assessment for the similar Breathing Space scheme in England and Wales found a significant net benefit to creditors – as those who engage with debt advice in general repay more of their debts. The technical amendments to existing bankruptcy legislation will benefit all parties who require to read and interpret the legislation and understand how it operates. This will reduce the likelihood of inconsistencies in interpretation of the existing legislation.

33. Creditors will also benefit from the new notification requirements in respect of arrestment and action of furthcoming and diligence against earnings, as they will be provided with additional information which may assist them in making decisions about how best (or whether) to pursue monies owed.

34. The amendment to exceptional attachment will also benefit debtors who will be afforded a longer period to pay the redemption fee for attached assets not removed immediately from the dwellinghouse. Further, debtors will benefit from being provided with a DAIP prior to the court hearing stage where diligence on the dependence is applied for. It is hoped that this measure will encourage debtors to seek help and advice.

35. The amendment to money attachment will streamline current procedures to the benefit of creditors. This will make the process of executing this diligence more convenient for creditors. This will also provide a saving for creditors as they will no longer face extra court costs if they seek permission from the sheriff to enforce the attachment outwith the prescribed hours.