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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.

8.3 Creditor petition

This role is undertaken by the Bankruptcy Applications and Decisions (BAD) team on behalf of the Accountant.

The BAD team must make a DCO after the award of bankruptcy, following consideration of a proposal from the trustee. The proposal must be submitted regardless of whether a nil contribution is to be assessed. The trustee must use the CFT to calculate the amount payable.

A trustee should not submit their proposal until all the requirements for assessing the debtor’s income and expenditure have been completed in accordance with Part 3 of the Bankruptcy Regulations. If a trustee cannot evidence the proposed DCO amount has been calculated using the CFT, the Accountant cannot make a DCO.

A debtor is required to co-operate with their trustee and provide full information and evidence relating to their income and expenditure to allow an accurate CFT calculation to be completed.

The Accountant will expect the trustee to have made reasonable efforts to obtain co-operation and evidence prior to submission of the proposal. They should inform the debtor, in writing:

  • of their obligations
  • of the consequences of not co-operating and providing their trustee with requested information and documents
  • that an assessed DCO may be made using information obtained by the trustee which may mean they are required to pay a higher amount than would have been calculated if they had co-operated
  • of the consequences of not paying the DCO and not co-operating

If the debtor still does not co-operate the trustee should consider submitting an assessed DCO proposal, if they believe it is in the best interest of the creditors to do so.

Trustees can assess and record amounts for the debtor’s income and expenditure that cannot be verified, by obtaining available information, accessing guidance and making reasonable assumptions.

Examples of information sources that may establish a debtor’s income and expenditure are:

  • employers and payslips
  • bank statements
  • information from creditors
  • information from credit reference agencies
  • information from reliable and reputable websites e.g. council and energy company

The trustee must:

  • inform the Accountant if the DCO proposal has been assessed
  • demonstrate they have considered and included in their proposal an amount for aliment for the debtor, if identified as being required, and sufficient amount to meet the debtor’s known obligations
  • provide a record of the supporting evidence, information and assumptions that support the income and expenditure amounts used in the calculation
  • re-assess and vary the DCO amount, if the debtor later provides acceptable evidence and information to satisfy the trustee that any income and/or expenditure amount used in the assessed DCO, was not accurate

Within 12 weeks of the date of the award, (six weeks for cases awarded prior to 29 March 2021), the trustee must:

  • submit the proposal 
  • provide a copy of the CFT calculation
  • provide any evidence, or relevant information, when trigger figures have been breached together with an explanation why the expenditure allowed is reasonable
  • any other relevant evidence or information to allow the Accountant to make a decision 

The Accountant acknowledges that in some cases this will mean it will not be possible for a trustee to comply with the 12 week statutory period for submission of a proposal, for example, if a debtor cannot be contacted, or is not co-operating.

When the trustee is unable to submit the proposal within this period they must apply for waiver under section 212 of the Act prior to submission (see section 18.3).

The Accountant will be agreeable to grant such a waiver if the trustee can demonstrate that they were unable to present their DCO proposal within the 12 week period and that they have taken reasonable steps, to contact the debtor and to obtain the required income and expenditure information.

The cost of the section 212 application will only be an allowable expense of the estate if the trustee can demonstrate the delay was due to debtor non- cooperation.

After considering the proposal the BAD team will make the DCO on a Form 18 of The Regulations and notify:

  • the debtor
  • the trustee
  • any third person who has been ordered to make the payments for the debtor i.e. an employer

8.3.1 Original DCO - review and appeal

An application can be made by the debtor, the trustee or any interested person to the Accountant’s independent review team for a review of a decision made by the Accountant to make the DCO.

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

When an application is received the order is suspended until the determination of the review.

The team must take into consideration any 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 make representation 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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