Tackling your debts

Is Minimal Asset Process (MAP) right for me?

Posted 15 August 2016

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How does MAP work as a Scottish solution for unmanageable debt? We’ll take you through all you need to know and explore the pros and cons.

If you’re finding your debts unmanageable, you might feel like there’s a big weight on your shoulders. But don’t worry – there are solutions out there that can help.

Minimal Assets Process (MAP) may be right for you if you’re struggling to pay your unsecured debts because your income is low and you have very few assets. MAP is an alternative route into sequestration (the Scottish form of bankruptcy), which you can only apply for if you live in Scotland.  

As with all debt solutions, whether MAP is right for you depends on your personal circumstances. 

Is MAP right for me?

If you’ve no income left after you’ve covered all of your bills each month, it can be hard to see a road to clearing your debts. The good news is Minimal Assets Process (MAP) is designed for people in just that situation. If you don’t have any disposable income after paying your essential outgoings, or your income is solely made up of benefits, MAP may be right for you.

MAP is a formal way to deal with insolvency and provides a cheaper alternative to full sequestration. If you’re insolvent, this means you’re unable to pay your debts and don’t have enough assets to sell to clear what you owe. 

MAP differs to sequestration as you don’t ever have to make payments towards your debts. This is because after you’ve paid for your essential living costs, such as rent or mortgage, you simply don’t have any money left over for your debts. So you’re not expected to make payments towards them if you start MAP. 

MAP replaced LILA (Low Income, Low Assets) in 2015 and is a legally binding agreement that lasts for six months. After the six month period, if you’ve kept to the terms and your situation hasn’t improved, all your debts will be written off. 

As with any debt solution, there are pros and cons of starting MAP. Let’s take a look at how they might affect you. 

What are the advantages of MAP? 

Other than the main advantage of your debt being wiped altogether after six months, there are additional benefits to being on a formal agreement. 

Whilst on Minimal Asset Process (MAP), your creditors can’t pursue legal action against you. This protection from creditors can help take any added pressure off you, as you’ll have a guarantee that you cannot be taken to court. Because of this, you should receive less contact from your creditors.

Having a definite end date is an advantage to being on MAP. You’ll be discharged after a six month period – although you’ll have to abide by some restrictions for a further six months. On the plus side, this is still considerably shorter than alternative legally binding solutions. 

Because of your financial circumstances, other than the initial ‘set-up’ fee of £90, you won’t pay anything towards your debts. This is because you simply can’t afford to do so. Your unsecured debts will be written off and you’ll be able to look forward to a debt free future. 

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What are the disadvantages of MAP?

But it’s not as simple as having your debt wiped completely after six months – you’ll need to consider whether this solution is the most suited to your needs. There are also some disadvantages to Minimal Asset Process (MAP) which you’ll need to know before going ahead. 

As with sequestration, your name will appear on the Register of Insolvencies (ROI) which is publicly accessible. This means that it’s possible that people you know can find out about your insolvency if they searched for your name or address on the register. However it’s mainly used by creditors and credit reference agencies.

Following your discharge from the solution, your credit history will still be affected. That’s because your solution will appear on your credit file for at least six years. This can make it more difficult to obtain future credit. It can also affect your ability to get accepted for some other services where you’re credit checked, such as a tenancy agreement or a mobile phone contract.

MAP can restrict you from pursuing certain job roles, for example, you can’t be the director of a limited company or sit on a school board. Even after you’ve completed the solution, it can be written into some employers’ contracts that you can’t work there if you have become insolvent. Therefore, you’ll need to consider future employment prospects before entering this agreement. 

If your unsecured debts are jointly owned, this can affect a debt advisor’s decision about whether they advise you to start MAP. This is because as soon as any unsecured debts are included into this insolvency solution, then the other person will be liable for the whole amount. Although, it still might be the case that MAP is the best solution for your circumstances.

A change in your circumstances can sometimes means that you have to go through the full sequestration process, for example if your income increased and you had some disposable income to put towards your debts. If this happened, you’ll have to pay a further £110 to make up the full £200 sequestration fee and make contributions for up to 48 months. Check out our blog for more information on sequestration. 

Just like sequestration and bankruptcy, if you break the terms of MAP you can still be subject to Bankruptcy Restriction Orders (BRO) – placing further restrictions on you for up to 15 years. 

Who could benefit from MAP?

So we’ve established the pros and cons of MAP, but do you qualify for this debt solution? Other than living in Scotland and having no disposable income, there are a number of conditions you must meet when considering MAP.

• You must owe between £1,500 and £17,000 in unsecured debts. 

• You must not be a homeowner. 

• If you have assets, the total amount must not exceed £2,000 – with a single item not being worth more than £1,000.

• If you own a car, it must be worth less than £3,000.

• You cannot be a director of a limited company.

• You mustn’t have been bankrupt in the last five years. 

For further information on whether you qualify for MAP, read our previous blog. 

How much does it cost?

When applying for a Minimal Assets Process (MAP), you’ll be required to pay a £90 fee. You might find this difficult to afford if you don’t have any disposable income, but it is significantly cheaper when compared to the £200 it costs to go through sequestration. There are debt charities that can help you with this fee and you may be able to pay it in instalments – though your debt solution won’t actually start until you’ve paid the whole amount.

How do I apply?

You’ll need to have sought advice from a specialised Money Advisor to apply for a MAP. Our advisors here can assess your circumstances and tell you whether you fit the criteria and whether it’s the right solution for you. 

You can look towards a future free from debt, so don’t hesitate to give us a call today. Using the options to the left hand side of this page can get you in touch with one of our specialised advisors. You can find further details on other Scottish solutions available by clicking here.

by Christine Walsh

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.