6. Other Factors to Consider in Debt Recovery
6.1 If an individual has received an overpayment, has applied for bankruptcy, is in a period of insolvency and has no entitlement to a recurring benefit then at the end of the insolvency period the debt is written off unless it is a fraudulently obtained overpayment. Therefore during a period of insolvency, the debt could not be referred to the sheriff court for recovery. After discharge, the debt associated with fraud can be pursued under normal recovery action and could include debt recovery through the sheriff court.
6.2 If an individual has applied for bankruptcy and is in a period of insolvency, then section 84 of the 2018 Act ensures that an individual's entitlement to benefits does not transfer to another person i.e. the individual would still continue to receive the benefits to which they were entitled. Under section 65 of the 2018 Act there is to be consideration of the debtor's circumstances and the policy is that no deductions in relation to the recovery of an overpayment will take place if the individual is in a period of insolvency.
6.3 Similar to those with no entitlement to a recurring benefit, the outstanding balance is written off at the end of insolvency unless it is a fraudulently obtained overpayment, when normal recovery action can commence. This means the individual would remain liable for paying debts obtained by fraud after being discharged from bankruptcy - normally a period of 1 year.
Recovery from estates
6.4 Where a debtor dies with outstanding Social Security debt, Social Security Scotland has the ability to recover overpayments from a client's estate and where there is no estate would look to write-off the outstanding balance. This debt includes any benefit that was given to the individual in respect of a period after the individual's death.
6.5 The value of funeral expense assistance given in connection with an individual's funeral is to be treated as a funeral expense that the individual's estate is liable to pay the Scottish Ministers.
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