MAP Bankruptcy is a process initiated by the Scottish Government in response to the lack of an effective route into bankruptcy for citizens who do not have regular income or who are without assets which can be used to repay their debts, such as property. Previously this could have prevented them from successfully concluding the procedure.
Now, however, those without assets are able to enter Sequestration through MAP Bankruptcy, even if they live on a low income or benefits. The scheme as launched almost two years ago, and since then has been used many times by our clients, with our team developing their experience in tackling debt in this way.
Despite offering a clear route to solving your debt problems, it should be noted that this option is really only suited to those unable to use standard Sequestration, and who do not qualify for other debt solutions, provided they meet the restrictions in place.
Do I qualify for MAP Bankruptcy?
As a Scottish Government scheme, MAP Bankruptcy is only available to residents of Scotland, with a further qualification stating that the individual must have been resident here for at least six months.
There are also fixed parameters defining the level of debt which can be addressed in this way. The total debt must exceed £1500, but cannot be more than £17,000, while the assets at your disposal can be no greater than £2000, with no individual asset worth more than £1000. If you own a car and require it for work, or for any other purpose which you can demonstrate is necessary, then it is possible for it not be included in the evaluation – as long as the car itself is worth less than £3000.
If you own your home or any land then you are unable to use this process, and you must also be able to show that you do not have the disposable income required to make contributions to your creditors.
There are further restrictions in place, such as a bar on its use by anyone who has already used the process or who has gone through Sequestration in the previous five years, and although it is designed for use by those who are drawing benefits it is important to be aware that you must have been on benefits for at least six months before your application for MAP Bankruptcy.
How do I begin the process?
To begin with MAP Bankruptcy you must seek out the advice of a Money Adviser, whose job it will be to guide you through the process and produce a successful application. It is not possible for individuals to make such applications themselves, which is where our team comes in. They will work with you from the first contact – when they start to assess your personal circumstances and financial situation – right through your award of a Certificate of Sequestration, which is when the process of MAP Bankruptcy can begin.
The assessment of your finances is done using the Common Financial Tool, which is a standard method of measuring your financial situation, created by the Scottish Government. This will measure your ability to repay the debt, and put in the place the timescale required for the process.
At the next stage – when the Accountant in Bankruptcy appoints a Trustee to you – a fee of £90 is payable for the application to be processed. Once this is done you will begin to work with your Trustee to tackle your debts, and they will stay in place for six months following the conclusion of the MAP Bankruptcy procedure.
This aspect of the process is crucial. Similar to Sequestration MAP Bankruptcy requires both the award of the Certificate of Sequestration and the appointment of an approved Money Adviser or Insolvency Practitioner to act as the Trustee.
What happens when I complete the MAP Bankruptcy process?
The goal when you enter MAP Bankruptcy is to secure your successful discharge. Normally this happens after a period of six months, but is totally dependent on you fulfilling the terms of the agreement. When you have reached this stage the process is fully concluded, but you will continue to have some restrictions placed on you for a further period of six months. These restrictions include a bar on you taking part in certain business transactions, while you will find it difficult to take out any more credit due to the mark MAP Bankruptcy will leave on your financial record.
This is the case because for one year following the conclusion of MAP Bankruptcy your name and details will appear in the Register of Insolvencies, an action which will also ensure you are unable to use this process again for 10 years.
While this method of solving your debt problems can help those in the type of difficult situation that could otherwise prevent them from finding a successful solution, these long-term consequences are important and our team will make sure you are fully aware of them before you go any further. If there are any questions you have, be sure to share them with one of our advisers who will ensure your are fully informed and ready to take full financial control once again.
Other side-effects which we will share with you include the potential impact on your existing tenancy agreement – either now or in the future, while for those seeking to work in the financial services industry there may be difficulties in the future.
If your financial situation improves during the term your MAP Bankruptcy process, meanwhile, you may find you are required to enter Sequestration. In such a case your transfer to the standard method of bankruptcy will take place because you are able to raise more funds for the repayment of you creditors. You will still work with a Trustee and move towards a formal discharge from the procedure in the normal way.