This item was published during the term of a previous administration that ended in April 2007
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Bankruptcy Bill before Parliament
24/05/2006
Ministers' plans to modernise Scotland's bankruptcy and debt enforcement laws will be considered by MSPs in the Parliament today during a Stage 1 debate on the Bankruptcy and Diligence (Scotland) Bill.
The plans should help strike a better balance between the needs of debtors, creditors and the public, Deputy Enterprise Minister Allan Wilson said, adding that changes to existing legislation would be good for business by recognising the need to support responsible risk-taking as a means of growing the economy.
Mr Wilson said:
"Debt, and dealing with debt, is a complex issue. In dealing with this, it is almost inevitable that competing interests come into play.
"Proposals contained in our Bankruptcy and Diligence Bill aim to strike a better balance between these competing interests.
"We will do this through creating an integrated system of debt management and debt relief, offering clear remedies for creditors, safeguards for those in debt and public protection against the minority of debtors who behave irresponsibly."
Bankruptcy affects individuals and small businesses. Bankrupts have their assets transferred to a trustee to be distributed amongst their creditors. They are also subject to certain disqualifications for a three year period - including restrictions on borrowing, not being permitted to be a director of a limited company.
Key proposals include:
• Reducing the bankruptcy period from three years to one year
• Bankruptcy Restriction Orders (BROs) to protect the public and business interests by continuing to enforce restrictions on potentially fraudulent and culpable bankrupts after they are discharged from their bankruptcy
• Streamlining the bankruptcy process and taking debtor applications out of the court system
Mr Wilson said:
"We want to give people an opportunity to move on with their lives and businesses more quickly after a period of bankruptcy.
"This will make Scotland a better place to do business, by encouraging responsible risk-taking and creating the right climate to move on and try again.
"At the same time, we don't want bankruptcy to be viewed as a soft option. We will do this through ensuring that there are checks and balances in place to protect the interests of creditors and ensure debt recovery. There must be tough sanctions in place to deal with the minority of bankrupts who are a particular risk."
Proposals to modernise Bankruptcy legislation sit alongside important changes to improve Diligence procedures - the legal process for enforcing orders for payment of money made by civil courts in Scotland.
Key proposals include:
• Creating a new protected minimum balance on arrested funds in bank accounts, helping vulnerable debtors to support themselves
• Setting up a new public body called the Scottish Civil Enforcement Commission to oversee a new single profession of judicial officer replacing the professions of messengers-at-arms and sheriff officers
• Creating a new diligence of land attachment to strike a fair balance between creditor interests in recovery and the risk of a debtor's ejection from their home
• Introducing a final notice (charge to pay) to debtors facing recovery of public debts under a summary warrant
Mr Wilson added:
"Our proposals to reform diligence will give creditors a range of new and updated tools to recover their debts more quickly and effectively.
"At the same time, there will be new protections to ensure that people in debt are treated in a humane and fair way and don't have excessive debt enforcement measures imposed on them.
"I believe that the Bill strikes a better balance - for the public, for debtors and for creditors and will help ensure that Scotland is a modern and efficient place to live and do business in."