The Bankruptcy (Scotland) Amendment Regulations 2024 Child Rights and Wellbeing Impact Assessment

CRWIA Stage 1 – Screening

Brief summary

1. It amends the Bankruptcy (Scotland) Regulations 2016 (S.S.I. 2016/397) (the “2016 Regulations”) which prescribes the rate of interest payable on creditors’ claims in bankruptcy (sequestration) under section 129(10)(a) of the Bankruptcy (Scotland) Act 2016 (the “2016 Act”) where there are sufficient funds to settle these claims in full.

2. It amends the methodology for calculation of the rate of interest to reflect the prevailing rates of interest more accurately at the date of sequestration by linking it to the Bank of England base rate.

Start date of relevant proposal: 6 April 2024

Which aspects of the relevant proposal currently affects or will affect children and young people up to the age of 18?

3. The aim of the regulations is to amend the methodology for calculating the prescribed rate of interest which can be paid in a bankruptcy where there are sufficient funds to settle creditors’ claims in full. It will move from a fixed rate of 8% per annum to a rate linked to the Bank of England base rate at the date of sequestration to more accurately reflect the prevailing rates of interest. There could be positives or negatives for the person in the bankruptcy depending on the movement in the Bank of England base rate.

4. It is possible for a young person aged 16 or over to incur debt in certain circumstances, for example, rent arrears. However, in general it is difficult for a person under the age of 18 to obtain credit as many creditors have policies to not approve credit to anyone under the age of 18. Therefore, as it will be unlikely that a child or young person up to the age of 18 will be experiencing unsustainable debt and have any direct involvement with the statutory debt solutions it is considered very unlikely that the policies included in these regulations will directly affect them.

5. It could be that these regulations may indirectly impact a child or young person if a parent or carer were to have involvement with debt solutions, however any such impact is considered to be minimal or remote, given the low percentage of sequestrations overall where any interest is payable at all. Where there is sufficient estate to pay interest, there could be positive or negative effects for that individual depending on the movement in Bank of England base rate (meaning more or less interest would require to be paid) and in turn there could be indirect positive or negative effects on the child or young person, though again we would consider these to be minimal or remote.

Which groups of children and young people are currently or will be affected by the relevant proposal?

6. None.