Notes for Guidance - Bankruptcy (Scotland) Act 2016 (as amended)

This guidance describes the general functions of Accountant in Bankruptcy, interim trustees, trustees and commissioners in relation to their responsibilities regarding bankruptcies which started on or after 30 November 2016.


14.1 Discharge of debtor

The discharge of a debtor from bankruptcy is conditional. The decision to discharge a debtor is made at the discretion of the Accountant in Bankruptcy, who must consider a report made by the trustee (where AiB is not the trustee) which includes a statement on the opinion of the trustee as to whether the debtor has cooperated with them. The current legislation is contained in section 137 of the Bankruptcy (Scotland) Act 2016. The discretionary nature of the AiB’s power of discharge was upheld in the appeal of Hutcheson vs. AiB [2019] SC ABE 53.

The fundamental policy is that an individual obtains relief from their debts through full co-operation in the process. This ensures both creditors’ and the wider public interest can be taken into account and properly protected, at the same time as giving the individual the fresh start they need. There is however a balance to be struck, in that keeping an individual undischarged for many years for relatively minor failures of co-operation serves little purpose.

It is the Accountant’s view that it is therefore not proportionate to refuse discharge indefinitely where the level of failure to co-operate is not significant to the administration or likely final outcome of the case. Whilst it remains the trustee’s judgement in terms of what to include in the statement of opinion, it is important that broadly the same approach is adopted across all cases, so that individuals do not face significantly different decisions depending on who their trustee might be.

This guidance is to assist proportionate administration of these cases, balancing the interests of debtors and creditors with the costs and benefits of continuing to keep the bankruptcy process ongoing in different categories of cases. The guidance identifies four broad categories and suggests a course of action most likely to be appropriate in each category, which will be the approach adopted in those cases in which AiB is the trustee.

Category 1 - Discharge immediately 

Where the debtor is deceased and the trustee has established there are no policies or assets or that these have been dealt with, the deceased debtor may be discharged.

Category 2 - Refuse discharge for one year

A nil DCO is set, or the debtor is found to be in receipt of benefits only. The debtor has completed the interview, signed Supplementary Questionnaire, Assets and Liabilities, and provided up to date Current Statement of Affairs (CSoA)

Outstanding matters:

  • the trustee considered that the debtor should complete a financial education course, but has failed to do so

Prior to recommending discharge, the trustee must be able to:

  • demonstrate there is no prospect of a future increase in a nil DCO
  • demonstrate they have conducted a recent check for new and current bank accounts
  • evidence there is no change in debtor’s circumstances

Category 3 - Refuse discharge until the end of the 48 month DCO period

1. A nil DCO is set, or the debtor is found to be in receipt of benefits only with no prospect of future DCO. The debtor has completed the interview.

Outstanding matters:

  • signed Supplementary Questionnaire, Assets and Liabilities or CSoA

Prior to recommending discharge, the trustee must be able to demonstrate:

  • there is no prospect of a future increase in a nil DCO
  • evidence all avenues have been explored to engage the debtor, including making a section 215 application to court
  • they have conducted a recent check for new and current bank accounts
  • be able to evidence there is no change in debtor’s circumstances

2. DCO not maintained for 48 months (includes assessed DCOs) but at least half of the DCO payments have been made. The debtor has completed the Interview, signed Supplementary Questionnaire, Assets and Liabilities

Prior to recommending discharge, the trustee must be able to demonstrate:

  • at least half of the DCO payments have been made
  • evidence all avenues have been explored to engage the debtor, including making a section 215 application to court
  • they have carried out a recent check for new and current bank accounts
  • be able to evidence there is no change in debtor’s circumstances

If debts are over £50k a Bankruptcy Restrictions Investigation (BRI) should be submitted to AiB before discharge to allow a 4-year Bankruptcy Restrictions Order (BRO) to be considered. (A Section 215 must first have been obtained and expired, prior to the submission of a BRI application).

Category 4 - Refuse discharge indefinitely 

If any of the following matters apply, discharge should not be recommended:

  • less than half DCO payments made
  • no contact/interview not conducted
  • interview conducted, no further contact from debtor or no DCO set
  • no trace (AiB deemed trustee)

These categories are intended to streamline the process in typical cases, allowing discharge where appropriate, but still requiring further action to ensure reasonable investigation is carried out. There may, however, be exceptional cases, and trustees may consider a different approach in particular circumstances, similarly other factors may arise or need to be considered by the AiB in any reviews. In particular, reference is made to Category 3 in the guidance. Trustees should submit a BRI application to AiB, enclosing a copy of a section 215 order,  where appropriate,  where debts are in excess of £50,000.

In determining the value of the debt owed in a case, the Trustee should rely on the total of creditors’ claims, and details of these claims must be recorded in BASYS before seeking the discharge of the debtor.

Further points to consider for all categories

The trustee must be able to demonstrate they have carried out several actions such as writing to the debtor on at least 3 occasions; emailed or telephoned the debtor on at least 5 occasions (where possible); instructed Sheriff Officers to conduct personal service; and instructed a tracing agent if appropriate. This list is not exhaustive.

The trustee must run a final check on the debtor, prior to recommending discharge to ensure the debtor has not opened any further bank accounts.

The trustee has the option to quash the DCO early, if appropriate on completion of CSoA, or grant discharge if estate has been realised to pay maximum dividend to creditors.

The trustee is expected to explore an assumed DCO in such situations if estate realised does not pay maximum dividend to creditors.

The Accountant is aware that this will still leave a significant number of cases where discharge will continue to be refused, including those serious cases in which the debtor’s discharge is refused indefinitely.

14.1.1 Actions of the trustee

The trustee must provide a report on BASYS, without delay, 10 months after the date of the award of bankruptcy.

The BAI team expects trustees to have submitted their report within three weeks of the end of the 10 month period. If the report is submitted after this period the trustee should include in their report an explanation why the report could not be submitted within this period.

When a trustee consistently fails to submit reports timeously, without good cause, consideration will be given to making a report to their professional body.

14.1.2 Application to the Accountant

The application and report should be created on BASYS. 

The report should include:

  • information on:
    • the debtor’s assets
    • liabilities
    • financial affairs,
    • business affairs (i.e. the current status of the realisation of the assets or investigations)
  • the debtor’s conduct in relation to these assets (i.e. did the debtor disclose all the assets etc and have they co-operated)
  • information on the debtor’s conduct in the course of the bankruptcy (i.e. has the debtor provided all information requested and co- operated with the trustee)
  • any other information about the bankruptcy the trustee deems appropriate
  • a statement by the trustee advising whether the debtor has at the date of the report
  • complied with any DCO (provide details of any missed payments or variations made)
  • co-operated with the trustee in terms of section 215 (i.e. has the debtor provided all relevant information and documentation on request)
  • complied with the statement of undertakings:
    • made a full and fair surrender of their estate
    • notified the trustee of any further assets acquired after the date of bankruptcy
    • informed the trustee of any change to address or financial circumstances
    • co-operated and provided requested documentation
    • completed any required financial education modules;
  • a statement by the trustee as to the extent, as of the date of the report, they have completed their functions under section 50 of the Act

After submitting the application on BASYS the trustee must send a copy of the report to the debtor and all known creditors providing details of their right to make representations to the BAI team within 28 days of the notification. The report can be downloaded from BASYS.

It is important to provide the BAI team, the debtor and creditors with as much information as possible to make a decision, or allow them to assess if representations should be submitted.

The trustee should also ensure all relevant documentation and information relating to the case has been uploaded to BASYS. 

14.1.3 Actions of AST

The BAI team will:

  • consider the information provided by the trustee and where appropriate request further information and/or evidence
  • consider any representations received with the specified timescale

14.1.4 Actions of the Accountant

The Accountant will consider discharging the debtor if:

  • all their obligations have been met
  • the trustee has been able to administer the case in a satisfactory manner
  • a DCO has been made and payments have been maintained;
  • representations have not been received to the suggest discharge should not be granted

The Accountant will not consider discharging the debtor if:

  • all their obligations have not been met
  • the trustee has not been able to administer the case in a satisfactory manner
  • a DCO has not been made, unless the trustee can confirm they have sufficient funds in hand to pay all creditors in full including statutory interest, at the time of making the report
  • a DCO has been made and payments have not been maintained
  • representations have been received to the suggest discharge should not be granted

The BAI team will notify the decision to the trustee and the debtor.

The trustee must within seven days of receipt of the decision notify all known creditors and provide details of the review and appeal procedure.

The decision of the Accountant to grant or not grant discharge will not take effect before the end of the period of 21 days beginning with the day the BAI team notifies their decision.

The Accountant will (if appropriate) make the entry on the Register of Insolvencies and place a copy of the certificate of discharge in the electronic Sederunt Book at a date which is later of:

  • 12 months from the date of the award
  • the day following the expiry of the review period
  • the day following the outcome of a review
  • the day following the decision of an appeal of a review

14.1.5 Subsequent debtor discharge reports

When a debtor was not discharged after 12 months from the date of award the trustee will require to submit a subsequent report when they consider it appropriate for the debtor to be discharged using the process as 14.1.2.

Evidence should be provided to confirm the reasons for which the debtor was not discharged have been resolved:

  • evidence of co-operation of debtor i.e. documents provided
  • evidence that trustee is able to administer the case satisfactorily
  • when a DCO has been made at a later stage at least 10 months have passed since the first payment date and the debtor is maintaining payments

14.1.6 Effect of discharge on the debtor’s estate

The discharge of the debtor has no bearing upon any estate which may vest in the trustee as at the date of bankruptcy, or estate which subsequently vests before the expiry of four years from the date of bankruptcy.

The effect of discharge is found in section 145 of the Act and it has no effect on the trustee’s powers and duties under the Act. Those powers and duties remain until the estate has been realised, distributed and the trustee discharged.

Subject to section 112(2) and (3) of the Act a debtor is usually re-invested in such estate only upon recall or reduction of the award of bankruptcy.

14.1.7 Discharge of debtor - review and appeal

An application can be made by the debtor or trustee to the Accountant’s independent review team for a review of a decision made by the Accountant to refuse to discharge the debtor.

An application can be made by any creditor to the Accountant’s independent review team for a review of a decision made by the Accountant to grant discharge the debtor. In this circumstance the decision to discharge the debtor will be put on hold until the outcome of the review is decided.

An application must be received before the expiry of 14 days from the date the decision was made by the Accountant.

The team must take into consideration submissions made by any interested person before the expiry of 21 days from the date the application.

The outcome of the review to confirm, revoke or amend the decision, determination or requirement must be made before the expiry of 28 days from the date the application for review was made.

Any person entitled to request a review may appeal the review decision to the sheriff before the expiry of 14 days from the date the review decision, determination or requirement was made.

The sheriff’s decision is final.

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