The Bankruptcy & Debt Advice (Scotland) Act 2014 came into force today on 1 April 2015, introducing, in the Scottish Government's own words, "one of the most modern systems of debt advice and debt management in the world."
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We are often asked to give advice on whether mortgage shortfalls i.e. the amount left due to a secured lender once a property has been repossessed and sold, should be classed as pre or post sequestration debts. If the debt is a pre sequestration debt then the debtor will be discharged of it on being discharged and the lender may submit a claim in the sequestration. If, on the other hand, it is a post sequestration debt then the lender is not entitled to submit a claim but may instead pursue the debtor for it.
Although based in Glasgow, Harper Macleod's reach around the world continues to grow with our team involved in cases in almost every continent. In one case the debtor was domiciled in Scotland. The agent had been unable to identify any assets in Scotland and it appeared that there would be no recovery for creditors. It came to the agent's attention that the debtor was married to a wife who was domiciled in Canada. Although the family assets were in the wife's name, she decided to raise divorce proceedings in Vancouver. This meant that the debtor became entitled to make a claim against his wife for a share of the matrimonial assets. That entitlement to make a claim was an asset of the debtor and ,therefore, vested in the AiB. We arranged for lawyers in British Columbia to have the AiB made a party to the action and to then negotiate with the wife's agents. As a result, settlement terms were agreed and the wife paid the trustee CDN$140,000.