SECONDARY CONSULTATION DRAFT

Transcription

1 SECONDARY CONSULTATION DRAFT DEBT ARRANGEMENT SCHEME REGULATORY IMPACT ASSESSMENT Title 1. [The Debt Arrangement Scheme (Scotland) Regulations 2003] Purpose and intended effect (i) The objective 2. The Regulations will provide for the implementation of a national statutory Debt Arrangement Scheme. The Scheme will assist personal debtors who are unable to settle their debts as they fall due, but who have some surplus income (i.e. in excess of that required for minimum subsistence), with which to make instalments to enable multiple debts to be assessed with the support of money advisers and paid in accordance with a debt payment programme over a period of time. During participation in the debt arrangement scheme enforcement action against and sequestration of the debtor will be prohibited. Creditors taking part in the Scheme will not run the risk of incurring the expenses of court action and of instructing diligence only to find another creditor has already done so and the debtor is unable to pay anything towards the first creditor's debts. 3. The scheme applies to Scotland only. (ii) The background 4. The Debt Arrangement Scheme is provided for in statute by the Debt Arrangement and Attachment (Scotland) Act Part 1 of the Act sets out the framework for the Scheme and gives the Scottish Ministers power to make further detailed provision in regulations. 5. Voluntary repayment programmes have been operating for many years. A debt management plan is currently set up on a voluntary basis for instalment payment of multiple debts by mutual agreement between a debtor and his creditors. Money advice workers and debt counsellors often broker these arrangements. Free money advice services, where voluntary repayment programmes can be arranged, are widely available from the not-forprofit sector and local authorities. 6. The principal limitation for voluntary debt repayment programmes is that they do not prevent creditors, who hold court orders or other authority to enforce, from proceeding to do diligence. Nor do they prevent them from petitioning for sequestration, where conditions for apparent insolvency apply. One intransigent creditor, therefore, can prevent a voluntary repayment programme from being agreed, to the detriment of the other creditors. The Debt Arrangement Scheme will, on the agreement of a proportion of creditors, prohibit any creditor from carrying out diligence or petitioning for sequestration during the currency of the Scheme. Administration of the Scheme will be delegated by the Scottish Ministers to a DAS Administrator and that function will be undertaken by the Accountant in Bankruptcy. This

2 role will be entirely separate from the Accountant in Bankruptcy s role and duties in relation to sequestration. (iii) Risk assessment 7. Statistics show that an increasing number of people are overindebted. The Scheme will allow those that are able to settle their debts over period of time the opportunity to do so. It also will ensure that, in these cases, creditors will receive more in settlement of their debts than would otherwise be the case. Debt payment programmes will be devised having regard to individual circumstances, with priority being given to ongoing payment of current liability for essentials such as housing, fuel, local/central taxation and child support maintenance. This is aimed at ensuring programmes success, avoiding further debt being incurred and safeguarding continued funding of public services. If a debtor breaches the conditions of a payment programme, it may be revoked. In that instance, the position in relation to enforcement will revert to the status quo ante and neither debtor nor creditors will be any the worse. Participation in the Scheme is by application only on the part of the debtor, who will have the choice sequestration or a protected trust deed as alternative options. It is not possible to assess with any confidence the number of debtors who will select each option as this will be dependent on personal circumstances and choice. Options 8. Scottish Ministers have committed themselves to implementing a national statutory Debt Arrangement Scheme built closely on the existing voluntary repayment programmes. Impact on business 9. The Regulations do not themselves regulate business activity. Rather, they affect the range of remedies available to businesses in the effect of default of monies owed to them. 10. The Scheme will be open to debtors who are personally responsible for their debts. This could include sole traders. In appropriate cases, this could mean that they could remain in business rather than being sequestrated. For business creditors, the Scheme gives them another option when considering the best way to recover money owing to them where the debtor is having difficulty in meeting multiple debts as they fall due. As both pre and postdecree debts may be paid under the Scheme, creditors may avoid the time and cost of a race to the courts and enforcing against limited assets in competition with other creditors. Their interests to recover by other means are safeguarded should debtors participation in the Scheme fail as prescription is suspended. It will allow efficiency savings to be made on internal administration through the use of co-ordinated and automated payment distribution. It is anticipated that there will be a greater prospect for creditors to recover more money in the medium and long term rather than writing off or receiving a small percentage in the pound in sequestration. 11. It is not possible to assess with any confidence the number of businesses which will be affected by the implementation of the Debt Arrangement Scheme. That will depend on the number of businesses undertaking activities involving an element of credit; the number of personal debtors who default on their obligations; on whether the debtor is in a position to meet his obligations over time and wishes to do so; and on the strategic decisions by the business involved on whether and how to pursue the debt in question. None of these can be

3 predicted with any accuracy as all are subject to a wide variety of external factors, such as the economic climate. Impact on public sector Comments are invited on this assessment of the impact. 12. Public sector creditors will be affected in the same way as business creditors. Public sector creditors may not, however, refuse to continue supplying services where customers fail to pay sums for which they are liable. This can mean that debtors may continue to incur mounting debts each year. The Scheme is designed to ensure that ongoing liabilities are met in order that further debt does not continue to be accumulated. It makes it a condition that current liability for sums due must be paid as essentials before calculating surplus income from which historical debt is to be paid. Impact on not for profit sector 13. The Scheme will have implications for the money advice sector. There will be resource implications as advisers wishing to draw up a debt payment programme under the provisions of the Debt Arrangement Scheme will have to be approved by the Accountant in Bankruptcy. Consultants engaged by the Scottish Executive are currently devising a system for approval of money advisers in consultation with the advice sector. Payment distributors disbursing the funds received from debtors participating in Schemes will also have to be approved by the Accountant in Bankruptcy. Costs (i) Business 14. The Regulations impose no direct additional costs on businesses. There is no compulsion for a business to participate in a debt arrangement programme. Where it does so, it will be because it considers it more beneficial than pursuing recovery of its debt in other ways. However, the DAS Administrator may dispense with consent of creditors in specified circumstances. Payment distributors will levy an administration charge on the creditors for their services but there is a commensurate saving to the creditor in not having to carry out their own administration of the recovery of the debt. A fee will be payable to access the DAS Register to determine whether debtors are participating in the Scheme. (ii) Advice sector 15. The Scottish Executive has provided an additional 3 million per annum until 2005 for the provision of front-line money advice services. In addition, it is providing central support for training and certification of money advisers at the cost of a further 500,000 per year for the same period. (iii) Scottish Executive 16. The Scottish Executive is providing additional funding for front-line money advice as noted above. The Executive will fund implementation costs of the Scheme, estimated at [ 1.5 million] and the running costs of central administration of the Scheme, estimated at

4 [ 0.8 million]. This latter cost will be partially offset by the fees charged for accessing the Register [and by a nominal fee for applying to participate in the Scheme]. The Executive will meet the costs of ensuring that guidance materials are available for debtors, creditors, money advisers, payment distributors and employers. Competition assessment 17. The Regulations bear on all sectors of business equally. Enforcement and sanctions 18. [N/A.] Monitoring and Review 19. The Executive intends that a report will be made to Parliament on the operation of the Scheme 3 years after implementation. It is also intended that the funding regime for the Scheme will be reviewed following operation of the Scheme for [1] year after implementation. Consultation Comments are invited on arrangements for review. (i) within Government/Executive Lord Chancellor's Department (now Department of Constitutional Affairs) Department of Trade and Industry Department of Work and Pensions HM Customs and Excise Inland Revenue Ministry of Defence Foreign and Commonwealth Office Scotland Office Scottish Court Service Scottish Executive Development Department Scottish Executive Justice Department Scottish Executive Finance and Central Services Department Office of the Solicitor to the Scottish Executive Office of the Solicitor to the Attorney General Accountant in Bankruptcy (ii) public consultation 20. The Scottish Executive issued the consultation paper, Enforcement of Civil Obligations in Scotland, to more than 200 individuals, agencies and bodies. The agencies and bodies covered the academic, advice, finance and business, legal and local authority sectors. A list of consultees is appended to the consultation paper. (iii) with small business

5 21. The consultation paper was widely distributed to interested bodies and individuals including Community Business Scotland, Confederation of British Industry (Scotland), Institute of Directors Scotland, Scottish Chambers of Commerce and the Scottish Federation of Small Businesses. (iv) secondary consultation [details of secondary consultation to be specified] Summary 22. The proposals for a statutory Debt Arrangement Scheme contained in the consultation document Enforcement of Civil Obligations in Scotland received overwhelming support. The framework for the Scheme contained in Part I of the Debt Arrangement and Attachment (Scotland) Act 2002 was subjected to detailed scrutiny in its passage through Parliament. The Regulations build on both the responses to the consultation document and the expressed wishes of Parliament. Detailed discussions took place with interested parties and organisations and secondary consultation on draft regulations was undertaken. Scottish Executive Justice Department Access to Justice 3 21 August 2003

6 Consultation draft 21 st August 2003 Draft Regulations laid before the Scottish Parliament under section 62(4) of the Debt Arrangement and Attachment (Scotland) Act 2002 for approval by resolution of the Scottish Parliament. DRAFT SCOTTISH STATUTORY INSTRUMENTS 2003 No. DEBT DILIGENCE The Debt Arrangement Scheme (Scotland) Regulations 2003 Made 2003 Coming into force 2003 ARRANGEMENT OF REGULATIONS Part 1: General 1. Citation and commencement 2. Interpretation 3. Fees 4. Consequential amendments Part 2: Money Advisers 5. Debtor to have a money adviser 6. Approval of a money adviser 7. Persons who may not be approved 8. Functions and duty of a money adviser 9. Notice by a money adviser: general

7 Part 3: Payments Distributors 10. Approval of a payments distributor 11. Functions and duty of a payments distributor 12. Charges by a payments distributor Part 4: Debt Arrangement Scheme Register 13. Debt Arrangement Scheme Register 14. Information on the DAS Register 15. Access to, and use of, information on the DAS Register 16. Notice of intention to approve, and approval of, a programme Part 5: Approval of debt payment programmes 17. Application for approval 18. Notice of intention to apply for approval 19. Debtors who may apply for approval 20. Consent of every creditor 21. Objection by a creditor 22. Composition and waiver of interest 23. Automatic approval 24. Determination by the DAS administrator 25. Determination by the sheriff 26. Standard conditions 27. Discretionary conditions 28. Notification of determination Part 6: Debt payment programmes 29. Method of payment 30. Payment mandate to employer

8 31. Continuing liabilities 32. Effect on creditors 33. Effect on a debtor Part 7: Variation of debt payment programmes 34. Application for variation 35. Variation by the DAS administrator 36. Grounds for variation 37. Determination of a proposed variation 38. Notification of determination of a proposed variation Part 8: Revocation of debt payment programmes 39. Automatic revocation 40. Application for revocation 41. Revocation by the DAS administrator 42. Grounds for revocation 43. Determination of a revocation 44. Notification of revocation 45. Apparent insolvency Part 9: Completion of debt payment programmes 46. Report of completion 47. Notice by a money advisor: completion 48. Notification of completion Part 10: Appeals 49. Appeals Schedule 1: Forms

9 Schedule 2: Fees Schedule 3: Consequential amendments The Scottish Ministers, in exercise of the powers conferred by sections 2(3) and (4), 4(5), 5(4), 6(1), 7 and 62(2) of the Debt Arrangement and Attachment (Scotland) Act 2002 and of all other powers enabling them in that behalf, hereby make the following Regulations, a draft of which has, in accordance with section 62(4) of that Act, been laid before and approved by resolution of the Scottish Parliament: PART 1: GENERAL Citation and commencement 1. These Regulations may be cited as the Debt Arrangement Scheme (Scotland) Regulations 2003 and shall come into force on [ ]. Interpretation 2. (1) In these Regulations the Act means the Debt Arrangement and Attachment (Scotland) Act 2002; the 1985 Act means the Bankruptcy (Scotland) Act 1985 ; the 1986 Act means the Insolvency Act 1986 ; creditor, unless the context requires otherwise, means any creditor other than a creditor in respect of a continuing liability; or a contingent liability that has not become purified; DAS administrator means the Scottish Ministers, or any person who may exercise the functions of the Scottish Ministers by virtue of an order made under section 8 (functions of the Scottish Ministers) of the Act (d) ; debt means any sum due by a debtor to a creditor and 2002 asp 17. Section 9(1) of the Debt Arrangement and Attachment (Scotland) Act 2002 (asp 17) ( the 2002 Act ) contains a definition of prescribed relevant to the exercise of the statutory powers under which these Regulations are made c c.45. (d) 2002 asp 17. This power has been [prospectively] exercised by S.S.I. 2003/[ ].

10 (d) constituted by a decree or document of debt; recoverable from a debtor as enforcement expenses; agreed in writing by a debtor as due for the purposes of an application under regulations 17 and 34; and paid to a creditor by a co-obligant in a liability of a debtor, and includes any judicial or contractual interest due on that sum; decree and document of debt shall be construed in accordance with section 10(5) (attachment) of the Act; [ continuing liability means a payment due by a debtor, other than arrears of such a payment, in respect of (d) (e) (f) any rent, mortgage, or insurance premium; a local or general tax, or rate; any aliment, periodical allowance, child maintenance or child support; the supply of electricity, gas, or fixed line telephone services; heating oil or solid fuel; and a criminal fine;] payments distributor means a person approved by the Scottish Ministers as a person who may perform the functions of payments distributor under the Act; protected trust deed has the same meaning as in Schedule 5 (voluntary trust deeds for creditors) of the 1985 Act; and sheriff and sheriff principal mean respectively the sheriff of the sheriff court district, and the sheriff principal of the sheriffdom, in which a debtor habitually resides. (2) A form referred to by number in these Regulations means the form so numbered in Schedule 1, or a form of substantially the same effect with such variation as the circumstances may require. (3) Any reference in these Regulations to anything done in writing or produced in written form includes a reference to an electronic communication, as defined in the Electronic

11 Communications Act 2000, which has been recorded and is consequently capable of being reproduced. Fees 3. The fees payable to the DAS administrator in respect of the matters specified in column 1 of Schedule 2, shall be the fees specified in relation to those matters in column 2 of that Schedule. (2) The DAS administrator may waive payment of an application fee by a debtor, where the debtor has a [very low surplus income]. Consequential amendments 4. Schedule 3, which contains amendments consequential upon the provisions of these Regulations, shall have effect. PART 2: MONEY ADVISERS Debtor to have a money adviser 5. (1) A debtor shall have a money adviser when applying for approval, and during the period of operation, of a debt payment programme. (2 A debtor shall forthwith give written notice to the DAS administrator that a money advisor has ceased to act for the debtor. (3) Where notice is given under paragraph (2), a debtor shall state the reason why the money advisor has ceased to act. (4) Where a money adviser has ceased to act by reason of the resignation of the adviser, the adviser shall assist the debtor to instruct a replacement adviser. Approval of a money adviser 6. (1) An application to the DAS administrator for approval as a money adviser shall be in form [ ]. (2) The DAS administrator shall approve an application under paragraph (1) if satisfied that the applicant is a fit and proper person to be a money adviser. (3) Approval as a money adviser shall be for a period of 2 years. (4) The DAS administrator may revoke the approval of a money adviser where 2000 c.7. Section 15 of the Electronic Communications Act 2000 (c.7) contains a definition of electronic communication.

12 satisfied that the adviser is no longer a fit and proper person to be an adviser; an adviser for a debtor fails to respond to a requirement by the DAS administrator for the adviser to provide evidence or information relating to the operation of the debt payment programme of the debtor; or in the opinion of the DAS administrator the adviser (i) (ii) has failed to carry out any function of an adviser under the Act or under regulation 8; and 6 weeks after written notice to the adviser of such failure, that the adviser has continued to fail to carry out that function. Persons who may not be approved 7. (1) A person specified in paragraph (2) shall not be a money adviser. (2) A specified person is a sheriff officer or messenger-at-arms, or an employee of such a person; a person providing financial services, or financial advice other than money advice, in the course of a business or otherwise for profit, or an employee of such a person, unless the person is a (i) (ii) solicitor; or chartered accountant. (d) (e) a person providing debt collection services, or an employee of such a person; a person convicted of an offence involving theft, fraud or other dishonesty; a debtor whose estate has been sequestrated, and who has not been discharged under sections 54 (automatic discharge after 3 years) or 75 (amendments, repeals and transitional provisions) of the 1985 Act ; (f) a bankrupt, who has not been discharged under sections 279 (duration) or 280 (discharge by order of the court) of the 1986 Act ; and (g) a person subject to a bankruptcy restrictions order (including an interim order) or bound by a bankruptcy restrictions undertaking, under Schedule 4A (bankruptcy restrictions order and undertaking) of the 1986 Act c.66. Section 54 was repealed in part by the Education (Student Loans) Act 1990 (c.6), Schedule 2, paragraph c.45. Section 279 was substituted by section 256 of the Enterprise Act 2002 (c.40) ( the 2002 Act ) c.45. Schedule 4A was inserted by section 257 of the 2002 Act,.

13 Functions and duty of a money adviser 8. (1) It is a function of a money adviser to (d) (e) (f) (g) provide money advice to a debtor; liase with creditors on behalf of a debtor; assist a debtor with, and advise on, implementation or variation of a debt payment programme; prepare and submit on behalf of a debtor an application under these Regulations; review a debt payment programme in every sixth month of operation; act as a lay representative in a court, where the adviser has accepted instructions by a debtor to act; and provide, as required by the DAS administrator, information about the participation of a debtor in a debt payment programme. (2) Where a money adviser will charge a fee to, or requires any other payment by, a debtor for money advice, the adviser shall inform the debtor that money advice is available without any fee or payment being due by the debtor ( free advice ); and of the name of (i) any adviser (or all, if more than one) providing free advice within a 10 kilometre radius of the debtor s place of residence; or (ii) the nearest adviser providing free advice to the debtor s place of residence, where there is no adviser within a 10 kilometre radius of the debtor s place of residence. (3) A money adviser shall carry out all functions of an adviser in accordance with guidance issued by the DAS administrator. Notice by a money adviser: general 9. A money adviser to a debtor in a debt payment programme shall forthwith provide written notice to the DAS administrator of (i) the appointment or resignation, as the case may be, of the adviser;

14 (ii) a change of payments distributor; and (iii) an agreement by a creditor to discharge all or part of a sum due by a debtor, or interest on that sum; the payments distributor for the programme of the matter specified in paragraph (i); and each creditor known to the adviser of the matters specified in paragraph. PART 3: PAYMENTS DISTRIBUTORS Approval of a payments distributor 10. (1) An application to the DAS administrator for approval as a payments distributor shall be in form [ ]. (2) Approval as a payments distributor shall be for a period of 3 years, and may be renewed by a further application for approval made no later than 6 months before the end of an initial or a renewed period, as the case may be. (3) The DAS administrator may revoke the approval of a payments distributor where the distributor fails without good reason to comply with a condition attached to the approval of the distributor; or guidance issued by the DAS administrator. Functions and duty of a payments distributor 11. (1) It is a function of a payments distributor to (d) (e) assist a money adviser with, and advise on, payments distribution; provide payment and distribution reports to money advisers, and to creditors; provide a facility for voluntary payment by a debtor of a continuing liability; provide information to the DAS administrator about the exercise of a function of a payments distributor; and to manage data and records as directed by the DAS administrator. (2) A payments distributor shall carry out all functions of a distributor in accordance with guidance issued by the DAS administrator.

15 Charges by a payments distributor 12. (1) In the exercise of a function under the Act or these Regulations, a payments distributor subject to regulation 31, shall make no charge of any kind to a debtor; and subject to paragraph (2), may require payment by a creditor of an administration charge. (2) An administration charge shall be no more than [ ]% of the sum due to be paid to a creditor. PART 4: DEBT ARRANGEMENT SCHEME REGISTER Debt Arrangement Scheme Register 13. (1) There shall be a register of debt payment programmes, to be known as the Debt Arrangement Scheme Register ( the DAS Register ). (2) The DAS administrator shall maintain the DAS Register in accordance with these Regulations. Information on the DAS Register 14. (1) Information in respect of the matters relating to debt payment programmes as specified in paragraph (2) shall be held on the DAS Register. (2) The specified information is (d) (e) (f) (g) (h) notices by debtors of their intention to apply for approval; applications for programmes that have yet to be approved; applications for programmes that have been rejected; notices that programmes are to be approved; approved programmes; applications for variation of approved programmes; variation of approved programmes; revocation of approved programmes;

16 (i) (j) appeals to the sheriff or sheriff principal; and completed programmes. [(3) The DAS Register shall include for each debtor who intends to or has applied for approval of a debt payment programme, or who is participating in a programme, a record of the full name, including any former name; (d) the date of birth; the national insurance number; and the home address or addresses, and any business address, of the debtor.] Access to, and use of, information on the DAS Register 15. (1) A money adviser may on behalf of a debtor inspect an entry in the DAS Register relating to the debtor. (2) An entry in the DAS Register made under regulation 14(2),, (d), and (e) may be inspected by a creditor, or prospective creditor, of a debtor; a payments distributor; and any other person, on reasonable cause being shown to the DAS administrator. (3) No person may use information from the DAS Register for the purpose of communication (by whatever means) of any advertising or marketing material which is directed to particular individuals. Notice of intention to approve, and approval of, a programme 16. (1) The DAS administrator shall on a determination that a debt payment programme is to be approved, enter in the DAS Register a notice to that effect. (2) A debt payment programme shall be approved from midnight of the second day after the date of the entry under paragraph (1) in the DAS Register. PART 5: APPROVAL OF DEBT PAYMENT PROGRAMMES

17 Application for approval 17. (1) A debtor who is habitually resident in Scotland may apply to the DAS administrator for approval of a debt payment programme. (2) An application under paragraph (1) shall be made by a money adviser on behalf of the debtor, and shall be in form [ ]. Notice of intention to apply for approval 18. (1) A money adviser may on behalf of a debtor enter in the DAS Register a notice of the intention by the debtor to apply for approval of a debt payment programme. (2) The DAS administrator shall remove a notice under paragraph (1) one month after the date of entry in the DAS Register of that notice, unless an application for approval is made within that period. Debtors who may apply for approval 19. (1) Subject to paragraph (2), a debtor may apply for approval of a debt payment programme where the programme provides for the payment of two or more debts. (2) An application for approval may not be made where subject to paragraph (3), payment of debts of a debtor is being made under a pre-existing conjoined arrestment order; there is a protected trust deed; or a debtor s estate has been sequestrated, and the debtor has not been discharged under sections 54 (automatic discharge after 3 years) or 75 (amendments, repeals and transitional provisions) of the 1985 Act. (3) An application may be made where in respect of a conjoined arrestment order a creditor, including a creditor of a debt being paid under the order in respect of another debt not so paid, has attempted to enforce a debt due by the debtor by any lawful means; or a debt not being paid under the order is agreed by the debtor as due for payment, and the debt is not constituted by a decree or document of debt. Consent of every creditor 20. (1) Subject to paragraph (3), every creditor of a debtor must consent to an application by the debtor for approval of a debt payment programme. (2) A creditor who is requested to consent to an application, and who does not respond to that request within 14 days after receipt, is deemed to consent.

18 (3) The DAS administrator may dispense with the consent of a creditor where the amount due by a debtor to a creditor is 50% or less of the total debt included in a programme; and the amount due to all creditors who refuse to consent does not exceed 60% of the total debt included in a programme. (4) Where a creditor does not consent to an application under paragraph (1), and that consent is not deemed as given or dispensed with, the approval of a debt payment programme under regulations 23, 24 or 25 shall not be invalid by reason only of the lack of consent provided that the debtor did not know, and could not reasonably have known, the identity of the creditor. Objection by a creditor 21. A creditor may object to an application by a debtor for approval of a debt payment programme where the creditor considers that the debtor should be sequestrated; or is in possession of heritable property with substantial unsecured value. Composition and waiver of interest 22. (1) A debt payment programme may provide that a liability of a debtor to repay a sum due, shall be discharged; or pay interest on a sum due, shall be waived. (2) An agreement between a creditor and a debtor for discharge or waiver under paragraph (1) may be made subject to a condition that the sum due after waiver or discharge is paid in full; and payment at the rate in the programme is made over an agreed period, not being more than the period of the programme. Automatic approval 23. (1) The DAS administrator shall approve a debt payment programme where every creditor has consented under regulation 20 to an application for approval. (2) Approval under paragraph (1) may be made subject to a condition under regulation 27. Determination by the DAS administrator 24. (1) Subject to regulations 23 and 25, the DAS administrator shall approve a debt

19 payment programme that is fair and reasonable. (2) In determining whether a debt payment programme is fair and reasonable, the DAS administrator shall have regard to (d) (e) the total amount of debt; the period over which a programme will operate; the method, and frequency, of payments under a programme; any earlier proposed programme that was not approved; any of the matters specified in regulation 19(2), where such matters no longer prevent an application for approval being made; (f) participation by the debtor in a (i) (ii) (iii) debt payment programme, other than one under these Regulations; time to pay direction under section 1 (time to pay directions) of the Debtors (Scotland) Act 1987, or time to pay order under section 5 (time to pay orders) of that Act ; or time order under section 129 (time orders) of the Consumer Credit Act 1974 ; (g) (h) (i) (j) the extent to which creditors have consented to a programme; any comment made by the money adviser; any failure by any person to comply with guidance issued by the DAS administrator; and any assets that could be realised to pay the debts included in a programme. (3) In determining whether a debt payment programme is fair and reasonable, the DAS administrator may have regard to any other factor that the administrator considers appropriate c.18. Section 1 was repealed in part by the Social Security Act 1998 (c.14) ( the 1998 Act ), Schedule 8, and amended by the Child Support Act 1991 (c.48), Schedule 5, paragraph 8, the Local Government Finance Act 1992 (c.14) ( the 1992 Act ), Schedule 13, paragraph 53, the Local Government etc. (Scotland) Act 1994 (c.39) ( the 1994 Act ), Schedule 13, paragraph 151, the 1998 Act, Schedule 7, paragraph 12, the Social Security Contributions (Transfer of Functions, etc.) Act 1999 (c.2) ( the 1999 Act ), Schedule 9, paragraph 1, and the Water Industry (Scotland) Act 2002 (asp 3) ( the 2002 Act ), schedule 7, paragraph 17. Section 5 was repealed in part by the 1998 Act, Schedule 8, and the Abolition of Poindings and Warrant Sales Act 2001 (asp 1), schedule, Part I, and amended by the 1992 Act, Schedule 13, paragraph 53, the 1994 Act, Schedule 13, paragraph 151, the 1999 Act, Schedule 9, paragraph 1, and the 2002 Act, schedule 7, paragraph c.39. Section 129 was amended by the Debtors (Scotland) Act 1987 (c.18), Schedule 6, paragraph 17, and Schedule 7, paragraph 5.

20 (4) Approval under paragraph (1) may be made subject to a condition under regulation 27. Determination by the sheriff 25. (1) The sheriff shall approve a debt payment programme on an application under paragraph (2), if the programme is fair and reasonable. (2) The DAS administrator shall [make a summary application] to the sheriff for determination of an application for a proposed programme where a creditor does not consent, and the DAS administrator may not dispense with consent under regulation 20(3); a creditor objects under regulation 21; or the DAS administrator considers it appropriate in all the circumstances. (3) In determining whether a programme is fair and reasonable, the sheriff shall have regard to the matters specified in regulation 24(2), and may have regard to any other factor that the sheriff considers appropriate. (4) Approval under paragraph (1) may be made subject to a condition under regulation 27. Standard conditions 26. (1) A debt payment programme approved under regulations 23, 24 or 25 shall be subject to the conditions specified in paragraph (2). (2) The specified conditions are that a debtor shall (d) (e) make all payments under a programme as they fall due; pay a continuing liability when due for payment; except for a continuing liability, make no additional payment to a creditor taking part in a programme; not seek or obtain credit beyond that permitted by regulation 32(1), or by a variation of a programme under regulation 37; notify the money adviser for a programme of any (i) (ii) change of address; and material change of circumstances, within 7 days of that change, or of becoming aware of that change, as the case may be; and

21 (f) supply the money adviser for a programme with any information or documentation required by the DAS administrator, in exercise of the functions of that administrator under the Act or these Regulations, within 10 days after receipt by the debtor of a request by the money adviser. Discretionary conditions 27. (1) A debt payment programme approved under regulations 23, 24 or 25 may be subject to one or more of the conditions specified in paragraph (2). (2) A specified condition is that the debtor shall realise, and distribute amongst the creditors the value of, any asset other than an asset excepted by paragraph (3); sign and deliver a payment mandate to an employer; seek agreement from a creditor to pay a continuing liability under regulation 31; (d) complete, and return when due, a tax or duty return or declaration; (e) (f) require payment of any sum into a [surplus income fund]; or be bound by any other reasonable condition intended to secure completion of the programme. (3) An excepted asset is any asset that is exempt from attachment under section 11 (articles exempt from attachment) of, or that is not a non-essential asset under schedule 2 (non-essential assets) to, the Act. Notification of determination 28. (1) The DAS administrator shall notify the approval or rejection of the application for approval of a debt payment programme in writing to the money adviser for the programme. (2) Where an application for approval of a programme is rejected, the DAS administrator shall specify the reason, or reasons, for the rejection. (3) Where an application for approval of a programme is approved, the approval shall have effect in accordance with regulation 16(2). (4) The money adviser shall intimate in writing the reasons for, and effect of the determination to the debtor; in form [ ], to each creditor known to the adviser; the clerk of a court that has made

22 (i) (ii) a conjoined arrestment order; or an order or direction specified in regulation 24(2)(f)(ii) and (iii); and (d) where payments are being made under an earnings arrestment, to the employer of the debtor. PART 6: DEBT PAYMENT PROGRAMMES Methods of payment 29. (1) Subject to paragraph (2), a debtor shall make the payments due under a debt payment programme to the payments distributor by a payment mandate to an employer; direct debit or standing order; or a smart card, swipe card, smart key or other type of payment card or key. (2) The DAS administrator may approve a payment method other than a method specified in paragraph (1), if satisfied that successful completion of a programme is more likely with that approval. Payment mandate to employer 30. (1) A payment mandate to an employer of a debtor shall be in form [ ]. (2) A debtor shall deliver any mandate to the employer, and provide the money adviser for the debt payment programme with a copy of the mandate. (3) On delivery of a mandate, an employer shall make the payments due under the mandate, until recall of the mandate by the debtor, where any other payment method approved under regulation 29 is substituted; or notice from a money adviser under regulations 44(3) or 48(2); and (4) An employer may on making a payment due under a mandate charge a fee equivalent to the fee chargeable for the time being under section 71 (employer s fee for operating diligence against earnings) of the Debtor s (Scotland) Act 1971, and deduct that fee from the balance then due to the debtor. (5) Subject to paragraph (6), where an employer fails without good cause to make a 1987 c.18.

23 payment due under a mandate, the employer shall be liable to pay on demand by a payments distributor the amount that should have been paid; and not be entitled to recover from a debtor the amount paid to the debtor in breach of the mandate. (6) A payments distributor may not demand payment from an employer more than one year after the date that the liability to pay arose. [Continuing liabilities 31. (1) Where a debt payment programme is approved, a debtor and a creditor may agree that a payments distributor shall pay a continuing liability to the creditor on behalf of the debtor. (2) Where a continuing liability is paid under paragraph (1), a debtor shall pay to a payments distributor the amount needed to pay the payment; and any fee or charge for each payment agreed by a debtor and creditor, by a method approved under regulation 29.] Effect on creditors 32. (1) Where a debt payment programme is approved the approval shall have the effect of a recall of an arrestment, other than an earnings arrestment or an arrestment subject to a conjoined arrestment order, and the DAS administrator shall send notice of recall in form [ ] to the party or parties with possession of the funds or property arrested; a protected trust deed, or other voluntary trust deed for creditors, shall be of no effect in any question between a debtor and a creditor who is a party to the deed; no person shall give credit to the debtor in a programme, other than (i) a social fund award repayable under section 139 (awards of social fund officers) of the Social Security Contributions and Benefits Act 1992 ; and (ii) credit approved by a variation under regulation 37; (d) a creditor shall not attempt 1992 c.4.

24 (i) (ii) subject to paragraph (5), any means of debt collection against the debtor in the programme, other than collection under the programme or the Act; or to persuade the debtor to withdraw from the programme; and (e) a creditor shall (i) (ii) on request by a money adviser to the debtor, provide a statement of all liabilities of the debtor; and notify the money advisor of any liability for which the creditor has security against a co-obligant of the debtor. [(2) Where a creditor gives credit to a debtor in an approved debt payment programme other than under paragraph (1), it shall not be competent to serve a charge for payment in respect of ; commence any diligence to enforce payment of; or found on in presenting, or concurring in the presentation of, a petition for the sequestration of the debtor s estate, the debt due to the creditor, as long as the programme is approved. (3) There is to be disregarded, for the purpose of the exercise by a creditor of any rights to enforce a debt (or remedies to like effect) subject to the restriction under paragraph (3), any period during which the programme is approved.] (4) In section 4 (effect of debt payment programmes) of the Act in subsection (2) (i) (ii) after, insert other than under subsection (2A), ; and after paragraph, insert to commit to prison under section 4 of the Civil Imprisonment (Scotland) Act 1882, other than for the purposes of section 40 of the Child Support Act 1991 b, in respect of, ; and after subsection (2), insert (2A) It is competent to 1882 c.42. Section 4 was amended by the Sheriff Courts (Scotland) Act 1971 (c.58), section 4, and extended by the Child Support Act 1991 (c.48), section 40, and the Social Security Administration Act 1992 (c.5), sections 187 and 192. b 1991 c.48.

25 auction an attached article where (i) notice has been given to the debtor under section 27(4) below; or (ii) an article has been removed, or notice of removal has been given, under section 53 below; (d) implement a decree of forthcoming; implement a decree or order for sale of a ship (or a share of it) or cargo; and sell the effects of a debtor under a sequestration for rent due by the debtor.. (5) This regulation shall not affect any right of a creditor under an enactment to require payment of a debt by installation, or adjustment, of a supply meter. Effect on a debtor 33. Where a debt payment programme is approved a debtor shall not enter into a voluntary trust deed with any creditor of the debtor. PART 7: VARIATION OF DEBT PAYMENT PROGRAMMES Application for variation 34. (1) An application to the DAS administrator for variation of a debt payment programme may only be made by a money adviser on behalf of a debtor; and subject to paragraph (2), by a creditor. (2) A creditor may not apply for a variation unless the creditor has first made a reasonable attempt to agree the variation with the money adviser for the debtor. (3) Where an application is made under paragraph (1), the DAS administrator shall intimate the application to the money adviser for the programme. (4) An application under paragraph (1) shall be in form [ ]. Variation by the DAS administrator 35. The DAS administrator may vary an approved debt payment programme by attaching

26 a condition under regulation 27 to the programme, if satisfied that the condition will make successful completion of the programme more likely. Grounds for variation 36. (1) An application for variation of a debt payment programme may be made on agreement between a debtor and each creditor participating in the programme; on agreement between a debtor and a creditor that a liability of the debtor to (i) (ii) repay a sum due, shall be discharged; or pay interest on a sum, shall be waived; (d) (e) on a material change in the circumstances of a debtor; where a debt due at the date of approval of that programme was omitted from the programme due to a mistake, oversight, or other reasonable cause; where a future or contingent debt, known but not quantifiable at the date of approval of the programme, is quantified; and (f) where a debtor requires credit to meet an essential requirement. (2) An application for variation shall not be made in respect of any other debt of a debtor. Determination of a proposed variation 37. (1) The DAS administrator shall approve a variation proposed under regulation 36(1) or. (2) Subject to paragraph (3), the DAS administrator shall approve a variation proposed under regulation 36(1) to (f) if the variation is fair and reasonable. (3) The DAS administrator may [make a summary application] to the sheriff for a determination of an application for variation, where the administrator considers that appropriate in all the circumstances. (4) The DAS administrator, or sheriff as the case may be, in determining whether a variation is fair and reasonable shall have regard to the matters specified in regulation 24(2); and may have regard to any other factor the administrator or sheriff considers appropriate. (5) Approval of a variation may be made subject to a condition under regulation 27.

27 Notification of determination of a proposed variation 38. (1) The DAS administrator shall notify the approval or rejection of an application for variation of a debt payment programme in writing to the money advisor for the programme. (2) Where an application for variation is rejected, the DAS administrator shall state in writing the reason, or reasons, for the rejection. (3) A money adviser for a programme shall intimate in writing the reasons for, and effect of, the determination to the debtor; and [in form [ ],] to every creditor known to the adviser. PART 8: REVOCATION OF DEBT PAYMENT PROGRAMMES Automatic revocation 39. Approval of a debt payment programme shall be revoked by the DAS administrator on intimation by a debtor of a petition for sequestration by the debtor. Application for revocation 40. (1) An application to the DAS administrator for revocation of the approval of a debt payment programme, may only be made by a money adviser, on behalf of a debtor; or a creditor participating in the programme. (2) An application under paragraph (1) shall be in form [ ]. Revocation by the DAS administrator 41. The DAS administrator may revoke the approval of a debt payment programme. Grounds for revocation 42. Approval of a debt payment programme may be revoked by the DAS administrator on application under regulation 40, or under regulation 41, where a debtor without good cause, does not have a money adviser; fails without reasonable cause to satisfy a condition under regulations 26 or 27;

28 (d) makes a statement in an application under these Regulations which the debtor knows to be untrue; or an instalment payable under the programme becomes due, and there remains unpaid a sum, due under previous instalments, of not less than the aggregate of two instalments. Determination of a revocation 43. The DAS administrator in determining whether to revoke an approval of a debt payment programme shall have regard to (d) any statement made by, or on behalf of a debtor; the nature of any failure, or untrue statement; any factor that tends to indicate whether or not the programme will be successful; and any other factor that the administrator considers appropriate in all the circumstances. Notification of revocation 44. (1) The DAS administrator shall notify in writing the money adviser for a debt payment programme of a revocation of the programme. (2) The DAS administrator shall state in writing the reason, or reasons, for the revocation. (3) Subject to paragraph (4), the money adviser shall intimate in writing the revocation by the DAS administrator, and the reasons (d) to the debtor; [in form [ ],] to each creditor known to the adviser; where there is a payment mandate under regulation 30, to the employer; and to the clerk of any court that has ordered a conjoined arrestment order. (4) Where there is no money adviser, the DAS administrator shall intimate the revocation to the persons specified in paragraph (3), and (d); and [in form [ ],] to each creditor known to the distributor.. Apparent insolvency

29 45. In section 7(1) (meaning of apparent insolvency) of the 1985 Act, at the end of paragraph (v), omit or ; and (vi), insert ;or (vii) a debt payment programme under the Debt Arrangement and Attachment (Scotland) Act 2002 is revoked, where any debt being paid under the programme is constituted by a decree or document of debt as defined in section 10 (attachment) of that Act,. PART 9: COMPLETION OF A DEBT PAYMENT PROGRAMME Report of completion 46. On completion of a debt payment programme, a payments distributor shall send a report of completion [in form [ ]] to the money adviser for the programme. Notice by a money adviser: completion 47. A money adviser for a debt payment programme shall send notice of completion of the programme [in form[ ]] to the DAS administrator where a report of completion [in form [ ]] is sent to the money advisor; or the creditors in the programme agree in writing to completion before the end of the period of the programme. Notification of completion 48. (1) The DAS administrator shall on request by a money adviser for a completed debt payment programme give confirmation of the completion to the adviser in form [ ]. (2) The money adviser shall intimate in writing the completion, whether or not confirmed by the DAS administrator 1985 c.66. Section 7 was repealed in part by the Drug Trafficking Act 1994 (c.37) ( the 1994 Act ), Schedule 3, and the Criminal Procedure (Consequential Provisions) (Scotland) Act 1995 (c.40) ( the 1995 Act ), Schedule 5, and amended by the 1994 Act, Schedule 1, paragraph 10(2), the Criminal Justice (Scotland) Act 1995 (c.20), Schedule 6, paragraph 185(3), the 1995 Act, Schedule 4, paragraph 58(3), the Debt Arrangement and Attachment (Scotland) Act 2002 (asp 17), schedule 3, paragraph 15(2), and the Proceeds of Crime Act 2002 (c.29), Schedule 11, paragraph 15(3) asp 17.