Ahsan Mustafa

These reforms are expressed through amendments to the Bankruptcy (Applications and Decisions) (Scotland) Regulations 2016 and related instruments. The most recent commencement instrument, SSI 2025/107, came into force in June 2025 and alters several long-running procedures.

One of the most significant changes concerns recall of sequestration. Under the amended framework, any debtor who repays their debts in full within six months of the award of sequestration will no longer be liable for statutory interest. This applies to both new and existing cases where repayment occurs after 25 June 2025. This adjusts the effect of the 2016 Act’s recall provisions; from a practical perspective, it removes a financial barrier that often deterred early repayment.

The procedure for recall has also been clarified. Amendments to Regulation 9 of the 2016 Regulations are intended to resolve ambiguity around notification and intimation when the Accountant in Bankruptcy (AiB) acts as trustee and seeks recall. Money advisors often encounter uncertainty about who should be informed and at what stage, particularly where the AiB is involved. The revised drafting provides a clearer statutory sequence, reducing the scope for procedural disagreement and improving consistency between cases.

Another area of reform is trustee resignation, which has been a longstanding difficulty in practice. When a debtor disengages or cannot be located, trustees have historically had limited options. Cases could remain open for extended periods, leaving individuals in a kind of administrative limbo. The 2024 Act addresses this by permitting a trustee to resign in specific circumstances relating to non-cooperation. The AiB may then be appointed as trustee in their place. New statutory forms introduced by SSI 2025/107 now sit within the 2016 Regulations to support this process.

Although it has attracted the most public attention, the mental health moratorium remains dependent on further secondary legislation before it becomes operational. The enabling provisions in the 2024 Act are now in force, but the final structure, including the scope of protections, the certification process and the categories of diligence that will be suspended, will be clarified through additional regulations. At present, individuals undergoing acute mental health crises can still face diligence and creditor contact. The new framework, once complete, should give advisers a clear statutory route to secure temporary protection for clients who are clinically unwell.

These reforms do not alter the overall shape of the 2016 Act, but they target specific areas where uncertainty and procedural gaps have created difficulty. There are, however, some practical considerations. The transitional provisions in SSI 2025/107 mean that not all cases will fall under the new regime.  It is also likely that the AiB will assume a greater number of trustee appointments in disengagement cases, which may influence timelines and communication patterns.

Taken together, the reforms aim to make the bankruptcy system more workable, more predictable and more responsive to vulnerability. For individuals in debt, especially those seeking a route out of sequestration or dealing with mental health challenges, these adjustments may make an appreciable difference.

Ahsan Mustafa is a senior associate in the banking litigation team at Aberdein Considine LLP