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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.

8.8 Payment break

The trustee, on the application of a debtor, may extend the payment period of a DCO by granting a payment break.

The debtor must specify the period during which they wish payments to be deferred. This period cannot exceed six months and can only be applied for once during the term of the DCO.

A debtor may apply for a payment break if there has been a reduction of at least 50% in the debtor’s disposable income as a result of any of the following circumstances:

  • a period of unemployment or change in employment
  • a period of leave from employment because of the birth or adoption of a child or the need to care for a dependant
  • a period of illness of the debtor
  • a divorce or dissolution of civil partnership
  • a separation from a person to whom the debtor is married or is the civil partner
  • the death of a person who, along with the debtor cared for a dependant of the debtor

8.8.1 Actions of the trustee

The trustee must assess if the cause of the reduction meets the requirements and use the CFT to assess if the disposable income has reduced by at least 50%.

When the payment break does not meet the requirements they must notify the debtor, in writing, and provide reasons for the decision.

If the trustee is satisfied that a payment break would be fair and reasonable they may grant a payment break on such conditions and for a period the trustee thinks fit, not exceeding six months.

The trustee must notify:

  • the debtor
  • any person required to make a payment under a Form 19 or 20
  • AiB

Although there is no statutory requirement to notify creditors the Accountant considers this would be good practice as they would be entitled to request a review of the decision under section 97 of the Act.

The trustee must upload to BASYS:

  • notification the payment break has been approved
  • copy of the new CFT calculation
  • evidence to support the change in circumstances

When the Accountant considers that the payment break was not appropriate, or the information provided is incorrect, a notification will be issued providing the reasons and the steps to be taken to remedy the situation.

8.8.2 Payment Break - review and appeal

An application can be made by the debtor or any interested person to the Accountant’s independent review team for a review of a decision made by the trustee to grant or refuse a payment break.

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

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.

The trustee, or the debtor, 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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