Bankruptcy and Diligence (Scotland) Bill: equality impact assessment

Background

7. The Scottish Ministers committed to undertake a wide-ranging policy review of Scotland's statutory debt solutions, specifically moratorium protection, bankruptcy, Protected Trust Deeds and the Debt Arrangement Scheme, with the aim of further enhancing and improving our system.

8. The policy review was organised into three stages. The first stage concluded with immediate changes being introduced through the Bankruptcy (Miscellaneous Amendments) (Scotland) Regulations 2021. These included important measures to improve access to bankruptcy by reducing or removing application fees for those in need of debt relief. The second stage was undertaken by stakeholder-led working groups. Their remit was to look at the operation of existing statutory debt solutions, aimed at providing recommendations and options for improvement.

9. In addition to this review the Scottish Parliament's Social Justice and Social Security Committee produced a report: Robbing Peter to pay Paul: Low income and the debt trap following an inquiry into low income and debt problems. The report urged the Scottish Government to implement a mental health moratorium.

10. A similar policy review of Scottish diligence measures was conducted through a stakeholder-led working group established to consider feedback received through an earlier public consultation in 2016. This working group consisted of stakeholders with a wide range of experience in diligence and the debt landscape.

11. The Scottish Government proposals in response to the working group's recommendations were included in the public consultation published in August 2022.

12. This Bill largely brings together the areas requiring primary legislation from Stage 2 of the review of statutory debt solutions and the review of diligence. Other areas can be taken forward in secondary legislation or through guidance.

13. In brief, the Bill includes provisions on the following:

• Mental Health Moratorium - introduction of an enabling power to permit the development of a new form of moratorium protection for a specific group of individuals, being those who are experiencing serious difficulties with their mental health as well as having problem debt
• Clarification of Bankruptcy Recall Legislation - minor amendments to these sections to clear current ambiguity for the recall of bankruptcy where Accountant in Bankruptcy (AiB) is the trustee
• Award of Bankruptcy – technical amendment which will correct a cross referencing error and make it clear that, under section 22(1)(b), all bankruptcies which meet the required criteria under the relevant subsection of section 2 of the 2016 Act, are to be awarded
• Gratuitous Alienations - technical amendment which will correct a cross referencing error in section 98(7) of the 2016 Act
• Time periods for appeal against decision by the AiB – minor amendments to insert into section 69 and 134 of the 2016 Act that the time period for an appeal to the sheriff against a determination by AiB must be made within 14 days
• Arrestment and Action of Furthcoming – introduce a new requirement for an arrestee to provide information if the arrestment was unsuccessful and the reason why, for example, whether this was due to insufficient funds
• Diligence Against Earnings - introduce a new requirement for an employer to notify the relevant party if an arrestment is unsuccessful within 21 days after the arrestment schedule is served
• Diligence on the Dependence - requirement for a Debt Advice and Information Package ("DAIP") to be issued to a debtor in advance of the relevant court hearing stage
• Exceptional Attachment - extend the redemption period where attached assets are left in the dwellinghouse and removed at a later date prior to the auction
• Money Attachment - amend the hours during which money attachment may take place

14. Full details of the provisions can be found in the accompanying Policy Memorandum.