Scottish Debt Solution League Tables

Scottish Debt Solution League Tables

Information from the Scottish Government, covering the period from the 20th December 2020 and the 30th of September 2021, shows which organisations provided debt solutions to people struggling with problem debt over that period.

The Scottish Debt Arrangement Scheme

The Scottish Debt Arrangement Scheme is a formal debt repayment plan that allows people to repay their debts. Under the Scheme, those struggling with problem debt can propose to repay their debts to their creditors, using just one payment per month, through a Payment Distributor. Importantly, the Scheme is free to those in debts, although creditors who have their debts included in a Scheme have to pay 22% towards the cost of setting up and administering the Scheme.

The Scottish Government only report organisations that have done more than 25 DPPs. The rest are included in other.

Money Advice Organisation Number of Approved DPPs.
Total3,812
Carrington Dean Group2,035
Harper McDermott592
Stepchange430
J3 Debt Solutions241
Interpath Advisory88
Wilson Andrews67
Begbie Traynors61
Citizen Advice Fife37
Wylie & Bisset30
Payplan25
Other207

Local Authorities and Citizen Advice Bureaux

Local Authority and Citizen Advice Bureaux, not for profit, local advice organisations also provide Debt Payment Programmes. In the list above (organisations that have done more than 25) only one of these types of organisations appeared, and that was Citizen Advice Rights Fife. Of those “Other” Organisations, 165 DPPs were carried out by Local Authorities and Citizen Advice Bureaux.

Organisation TypeNumber of DPPS Approved
Local Authorities69
Citizen Advice Bureaux96

Bankruptcy: Certificate of Sequestration

For people in Scotland to apply for their own Bankruptcy (also known as Sequestration), they first need to have a Certificate of Sequestration signed.  Between the 1st December 2020 and the 30th September 2021, the following organisations signed Certificates of Sequestration. 

There are two processes that can be used when someone is going Bankrupt in Scotland, one is Full Administration Bankruptcy and the other is using the Minimum Asset Procedure. The figures for Certificates of Sequestration are broken down into the two procedures used.

Money Advice OrganisationNumber of Certificate of Sequestrations (MAP)
Total1,263
Stepchange286
Citizen Advice Rights Fife115
Christian Against Poverty44
South Lanarkshire Council – Money Matters39
West Lothian Council37
Inverness, Badenoch and Strathspey CAB30
Aberdeen Council28
North Lanarkshire Council27
Moray Council27
Haddington CAB25
Other605
Scottish Government only report organisations doing more than 25 Certificates of Sequestration
Money Advice OrganisationNumber of Certificate of Sequestrations (FAB)
Total484
Stepchange91
Wylie and Bisset36
Other357
The Scottish Government only report Organisations that have done more than 25 COS

Protected Trust Deeds

Protected Trust Deeds are a type of personal insolvency in Scotland and must be administered by private insolvency practitioners.

Trustee OrganisationNumber of Protected Trust Deeds
Total4,259
Carrington Dean1,549
Harper McDermot1,349
J3 Debt Solutions473
Wilson Andrews249
Interpath Advisory197
Wylie and Bisset146
YEG Insolvency (formally AGT Insolvency)95
Payplan49
Begbie Traynors36
Hanover Insolvency34
Parker Phillips Insolvency26
Other56
Are Further changes Required for Minimum Asset Bankruptcies in Scotland?

Are Further changes Required for Minimum Asset Bankruptcies in Scotland?

The UK Government has announced several new changes that it intends to introduce for Debt Relief Orders (DROs), that apply only in England, Wales, and Northern Ireland.

These solutions are like Scotland’s Minimum Asset Bankruptcy Procedure (MAPs) and offer consumers with little income, and little to no assets, a solution for dealing with their debts and writing them off after a relatively short period of time. 

However, there are several key differences between the solutions and these differences will soon become more pronounced when changes proposed by the UK Government to Debt Relief Orders come into effect.

The Question is, then, is there more the Scottish Government should be doing to improve the Minimum Asset Procedure in Scotland?

Already, because of Covid 19, they have introduced emergency laws last year, that have now become permanent, and have improved the Scottish option in many areas, but still in one key respect, the level of income ignored, the Scottish solution still lags.

Maximum Debt LevelIncome IgnoredAsset LevelsCar ExemptionDuration Application Fee
MAP£25,000 (2)£0.00£2,000 (3)£3,0006 Months£50 (4)
DRO(1)£30,000£75£2,000£2,00012 Months£90

Notes

  1. Proposed changes
  2. In Scotland, Student Loans are ignored when calculating the maximum debt level
  3. No single asset can be worth more than £1,000
  4. Application fees are waived when someone is in receipt of a benefit. The vast majority of MAP applicants will pay no application fee in Scotland

Maximum Debt Levels

Both options are similar in the maximum level of debt you can introduce, however, the new proposed changes to DROs in the UK will mean up to £30,000 in debt can be included, whereas the maximum debt that can be included in Scotland is only £25,000.

However, in Scotland, where you have Student Loans, which liability for is not discharged in either solution, these are ignored when calculating the maximum debt levels. This for some will mean a MAP is a viable option in Scotland, when they have higher non-student loan debts, than it will in the rest of the UK, even when their non-student loan debts are lower.

However, this will not help those in Scotland without student loan debt, who may find if they lived in England could do a DRO, but in Scotland cannot. This, however, won’t prevent them using a Full Administration Bankruptcy in Scotland, which may only last12 months, like a DRO in the rest of the UK.

Income Ignored

This is one of the biggest differences between the two options, with DROs ignoring the first £75 of someone’s disposable income (what is left after their essential expenditure is taken off their income). In Scotland, no such provision is made, meaning if you have just £5 left each month from income that a contribution can be taken from, you cannot use the Minimum Asset Procedure.

It should be noted, however, that no contribution in either solution can be taken from benefits, so the only income that a contribution can be taken from is non-benefit income.

This undoubtedly is a shortcoming in the Scottish Solution, as what it means is in England, Wales, and Northern Ireland, where you have under £75 per month, you can keep it. In Scotland, not only can you not keep it, but you cannot use the Minimum Asset Procedure. You would then have to use the Full Administration Procedure (the equivalent to Bankruptcy in the rest of the UK) and unlike in England, Wales, and Northern Ireland, you would need to pay the money for four years and not just three.

Assets Levels

Although in relation to both solutions these look the same, with the maximum assets you can own being anything up to £2,000, in Scotland, there is one key difference in that no one asset can be worth more than £1,000.

However, in Scotland’s defence the extent of assets that are disregarded for the purpose of MAPs are more extensive (see here).

Car Exemptions

Scotland since 2010, has set the value of a car that is exempt for the purposes of a MAP and Bankruptcy at £3,000 (although it has not increased since then), whereas in the UK the value of car exempt for a DRO will only be set at £2,000.

The only other caveat in Scotland worthy of note, is the applicant must show they have a reasonable requirement for the car.

Duration

This is the other big difference between the solutions, in that in a MAP in Scotland, the solution only last 6 months, and after that the consumer becomes debt free. In the rest of the UK, the solution lasts 12 months.

Although it should be noted, in Scotland, even if you have £5 disposable income per month, you will not be able to use the Process and instead will have to use Full Administration Bankruptcy and pay for 4 years.

Fees

The other big difference now, since Covid 19 emergency legislation was introduced, is the amount it costs someone to apply for the procedure. In the rest of the UK, the fee is £90 (as it was for Minimum Asset Bankruptcy prior to Covid 19). In Scotland, however, that fee has now reduced to £50 and where the applicant is in receipt of several different benefits, the fee is waived. This means almost no-one in Scotland will pay an application fee, whereas in the rest of the UK, even after the new changes are introduced, the fee will remain £90.

Conclusion

There are several differences between both solutions, as can be seen, but on the face of it where the Scottish solution lags, when considered more widely, it is not as far behind Debt Relief Orders as it may appear. In actual fact, in many respects, MAPs appear superior.

However, it does appear the big difference in relation to both is the difference in how disposable income is treated, with many consumers having to use Full Administration Bankruptcy in Scotland for relatively small sums of disposable income.

Considering this may result in them having to pay for four years, this appears to be disproportionate; and from a policy perspective may be counterproductive. It may result in low-income households giving up relatively small additional sources of income, like part time jobs, just to avoid being excluded from the Minimum Asset Procedure.

The arguments in favour of Scotland, therefore using a similar approach to the rest of the UK and disregarding the first £75 of disposable income, appears overwhelming