More than nine in ten Scots who go bankrupt leave their creditors with nothing, as ministers prepare to make it easier for people with debts of up to £50,000 to wipe the slate clean. Critics warn the reforms could leave the system open to abuse.
The Herald can reveal that the number of people going bankrupt has also jumped by almost a fifth in a year, with 2,976 cases recorded in 2025-26 – up 494, or 19.9 % , on the previous 12 months.
The latest Accountant in Bankruptcy records show that 2,493 bankruptcy cases were completed during the year, but ordinary creditors received some money in only 7.9% of them. In the remaining 92.1% – around 2,296 cases – creditors received nothing.
Even when the simplest form of bankruptcy is excluded, almost eight in ten completed cases resulted in creditors getting no money back. Across those cases, the average amount returned was just 11.9p for every pound owed, including cases where nothing was paid.
The figures show that more than 2,400 of the bankruptcies last year followed applications by people who could no longer pay their debts, rather than action by creditors trying to recover the money they were owed. Around two-thirds of those applications – approximately 1,600 – used the Minimal Asset Process, known as MAP.
The process is designed for people with few possessions and little or no spare income. It offers a quicker and cheaper route out of debt than full bankruptcy, but generally leaves little or nothing available to repay those owed money.
The analysis comes as ministers prepare to substantially widen access to MAP, doubling the maximum debt allowed from £25,000 to £50,000.
The proposed changes would also allow applicants to keep more of their possessions, while reducing the time they must wait before applying for the process again from ten years to six.
But the plans have drawn a warning of potential abuse of the system from the Association of Business Recovery Professionals, known as R3, which represents insolvency, restructuring and business recovery professionals across the UK.
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In its response to Scottish Government's initial debt solutions, seen by The Herald, R3 warned that raising the MAP debt limit from £25,000 to £50,000 could create an opportunity for people to build up substantial debts before using the simplified process to escape them.
It said an increase "could open the system to abuse, potentially incentivising individuals to accumulate substantial debt with the knowledge that they could access a MAP without facing significant repercussions".
R3 said the existing £25,000 ceiling served as a protection for creditors and the public, because people with debts above that amount had to go through full administration bankruptcy, which involves an insolvency practitioner examining their financial affairs.
The organisation added: "However, should the limit be increased, we must stress the importance of incorporating appropriate safeguards and ensuring that appropriate investigations are conducted."
R3 also questioned whether enough evidence had been provided to justify the change, asking the Accountant in Bankruptcy to supply statistics showing how many people were currently prevented from using MAP because their debts exceeded the existing £25,000 limit.
The organisation proposed a compromise under which the £50,000 ceiling would apply to a person's first MAP application, but the existing £25,000 limit would remain for anyone applying for the process again.
The Government's proposals would instead introduce the higher debt limit alongside the shorter six-year waiting period.
Under the existing rules, people applying for MAP must owe less than £25,000, must not own land or property and cannot have a single asset worth more than £1,000. Their total assets must not exceed £2,000, apart from a necessary vehicle worth up to £3,000. They must also have no spare income available to make payments towards their debts.
The Government wants to increase the permitted value of a single asset to £3,000 and the total value of assets to £5,000. The value of a vehicle applicants can keep would rise from £3,000 to £7,000, while the protected value of tools needed for work would double from £1,000 to £2,000.
The permitted value of sentimental possessions would increase from £150 to £2,000, and mobility scooters would be excluded from the assets that can be taken to help repay debts.
The changes are intended to make it possible for more people in serious financial difficulty to use MAP rather than having to go through full administration bankruptcy.
Under MAP, a person is normally discharged from bankruptcy after six months. Full administration bankruptcy is a longer and more expensive process, with discharge not taking place before 12 months. It is intended for people with more significant debts, assets which may be sold or enough income to make payments towards what they owe.
The Scottish Government argues that putting someone with no assets or spare income through the more expensive process can create additional work and costs without producing much, if anything, for creditors.
The changes follow a three-stage review of Scotland's statutory debt solutions, with an independent review published in March 2026 recommending that the MAP debt ceiling should rise to £50,000 and the reapplication period should fall to six years.
The Scottish Government is proposing to increase the value of certain possessions people can keep when they are declared bankrupt, including tools of the trade, sentimental items and mobility scooters.
The review also recommended increasing the value of vehicles protected from bankruptcy to £5,000, pending further research into used car prices. The Scottish Government's proposals go further by setting the limit at £7,000.
In its October 2026 impact assessment, the Government stated: “Tools of the trade, sentimental items and mobility scooters are rarely declared or sold in bankruptcies so it’s unlikely to have a significant effect on recoveries for creditors.”
However, the report acknowledged that “accurate statistical information showing how often these types of items are attached, sold and amounts recovered by creditors is not available.”
It also revealed that, in 2024-25, just 220 of 230,895 non-summary warrants executed resulted in an attachment – equivalent to 0.09 per cent. The report said there was no detail showing what types of debts were being pursued through those attachments.
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