Bankruptcy and Attachment (Miscellaneous Amendment) (Scotland) Regulations 2026: equality impact assessment

Background

In 2019 the Scottish Ministers committed to undertake a three stage wide-ranging policy review of Scotland’s statutory debt solutions, with the aim of further enhancing and improving the system. This was in addition to a separate stakeholder-led review of diligence which had commenced in 2018.

In response to the pandemic, the first stage of the review was to consider changes which could be immediately implemented. This culminated in those changes being introduced through the Bankruptcy (Miscellaneous Amendments) (Scotland) Regulations 2021.

The second stage of the wider review was undertaken by three stakeholder-led working groups formed from a wide body of sector specialists with expertise in debt advice and the operation of statutory debt solutions. The members included money advice professionals, insolvency professionals, creditor bodies and academics. The working groups considered any improvements which could be made to the existing statutory debt solutions including entry criteria and asset values in bankruptcy.

Having considered the recommendations of the stakeholder-led working groups formed at stage two of the review and of the separate working group on diligence, the Scottish Government responded by developing proposals which were published for public consultation in August 2022.

Stage three of the review was carried out independently of the Scottish Government and was a longer-term strategic review of the Scottish statutory debt solutions to assess if they meet the needs of a modern economy. This involved a call for evidence, a public consultation and two nationally representative surveys. A final report of recommendations was published in March 2026.

These Regulations bring forward the areas requiring secondary legislation for bankruptcy and diligence from recommendations made during stage two of the review of Scotland’s statutory debt solutions and the diligence review. Other areas which required primary legislation were taken forward in the Bankruptcy and Diligence (Scotland) Act 2024 (the “2024 Act”), which was passed by the Scottish Parliament on 6 June 2024 and received Royal Assent on 15 July 2024. During the passage of the 2024 Act additional bankruptcy areas were identified which could be addressed in secondary legislation and these are brought forward in these Regulations together with some areas identified and recommended during stage three of the wider review of statutory debt solutions.

There has been ongoing consultation and discussion with stakeholders, including meetings hosted by the previous Minister for Public Finance. The proposals have been shared and amended following discussions with stakeholders.

The Regulations will predominantly affect individuals with problem debt and who require to enter a bankruptcy process or where action is being taken against them by a creditor to recover an outstanding debt. While increasing the level of assets which can be retained by the individual in debt may potentially reduce recoveries to creditors in bankruptcy this reduction is unlikely to be significant. Similarly, while there may be reduced returns to creditors in the diligence process of attachment, accurate statistical information showing how often these types of items are attached, sold and amounts recovered by creditors is not available. The Regulations aim to strike a balance between the respective interests of these groups.

Bankruptcy and diligence

There are two types of bankruptcy in Scotland – MAP bankruptcy and Full administration bankruptcy.

MAP bankruptcy is a shorter, cheaper and less intrusive process for individuals who have limited assets and are in receipt of certain prescribed payments (for example, certain benefits) or have insufficient income to make a contribution to their bankruptcy. The alternative, Full administration bankruptcy, is a longer more expensive process for those with more significant debts, assets that can be sold, and/or an ability to make a monthly financial contribution to their bankruptcy.

Diligence is various forms of legal process taken by creditors to make a party repay overdue debts. It can include attachment which allows a creditor to take possession of and sell certain assets belonging to another party to recover unpaid debts.

These Regulations will bring forward stakeholder-led recommendations to revise and simplify the entry criteria for MAP bankruptcy and provide greater flexibility, potentially allowing more people access when they have a limited level of assets and low income.

The entry criteria will be amended as follows:

There are certain items which are excluded from the MAP bankruptcy entry criteria and that do not vest in the trustee in any bankruptcy or do not attach in diligence. These Regulations will increase the value of the following items which have not been changed for a significant number of years and have not kept pace with the economy. The changes will enable individuals with financial problems to retain a greater amount of their possessions and help them to continue to work and address their debt problems.

While certain people are more likely to have problem debt these Regulations are not creating a new product or process. The Regulations update the current entry criteria for MAP bankruptcy enabling more people who may currently have to enter a Full administration bankruptcy to instead enter MAP bankruptcy. Both bankruptcy processes are and will remain available equally to all individuals irrespective of their characteristics.

The Regulations also increase the values of assets which are retained by an individual in bankruptcy or where diligence is taken against them enabling them to retain a greater value of their possessions. The enhanced asset protections are available to all individuals who require to enter a bankruptcy process or who are being pursued for debts owed by them irrespective of their characteristics. There have been differing stakeholder opinions on whether mobility scooters are classified as vehicles, medical aids or medical equipment and therefore already do not contribute to the total asset value for entry into MAP bankruptcy, do not vest in a trustee in bankruptcy and cannot be attached by diligence. These Regulations will put this beyond doubt. There is also no evidence that mobility scooters have been taken and sold by trustees in bankruptcy cases or attached in diligence. We do not consider that there will be any negative impact on a person with a disability, and it may help to provide reassurance to someone who relies on a mobility scooter.

Method of communication

The Regulations are intended to make email the default method of communication between AiB and the individual during the administration of their bankruptcy case.

It is recognised that there may be instances where email may not be a suitable communication method for some individuals. While the aim is to make the default method of communication email, the overall position and impact on individuals will not change. There is currently the ability for the individual to select the method of communication which suits their personal circumstances, and this is being retained. We do not consider therefore that this provision will affect those with a protected characteristic.

Other Amendments

The provisions to amend the 2016 Regulations to replace references to MAT with AiB for the CFS, insert a missing “of” in section 147C(1)(b) in the 2016 Act and update the prescribed forms in the 2016 Regulations are administrative only and will have no impacts on any individuals.