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Balancing the books for debtors and creditors |
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The following is an adaptation of an article by Allan Wilson, MSP. This appeared in www.theherald.co.uk on 28th March, 2006.
Allan Wilson, MSP, is keen to put some perspective on proposals contained in the executive´s Bankruptcy and Diligence (Scotland) Bill, following the Heralds front-page article of March 21 (How you could lose your home for £1501 debt).
This highlighted fears that the proposed new diligence of "land attachment" would lead to a rise in homelessness in Scotland. This is a concern that the MSP takes very seriously, stating that is why they have introduced a range of safeguards to ensure that a creditor´s right to be paid is balanced by the need to protect those in debt from harsh or excessive treatment.
As the Herald article points out, these include a creditor with an attachment over someone´s home having first to seek permission from a sheriff before selling the land. On reaching a decision, the court must take into account the debtor´s family circumstances including the availability of other accommodation and the nature of the debt. In addition, a creditor with security over a property who wishes to sell it must wait six months before applying for permission to do so.
However, those in debt who could pay with a bit more time and support can use the free money advice the executive has funded and stop either the attachment or the sale by using a "time to pay" arrangement such as our Debt Arrangement Scheme.
In addition to these specific protections, there are existing wider safeguards under the Mortgage Rights Act to help those at risk of losing their home through defaulting on mortgage payments.
Allan Wilson points out that the right to sell land for debt is not, in fact, new in Scotland, and that most legal systems allow creditors to attach and sell land. Also, any homeowner in Scotland with a debt of more than £1500 is at high risk of losing their home if they are made bankrupt. Currently, this is the only way a creditor can get at the value in land or homes and title to the home is lost right away. Land attachment, on the other hand, allows the creditor to get at the equity without bankrupting the debtor.
Evidence from other legal systems suggests that in nearly all cases having a security over the land is enough for the creditor, and that sales of homes will be rare. So, land attachment will make it less likely that creditors will bankrupt people and the debtor much more likely to be able to stay in their home.
Mr. Wilson states that the aim of the bill is to provide a modern law for a modern Scotland and that we all have a role to play in that process.
For this and other news items please visit www.debtscotland.com. By registering on the site you will find a host of debt recovery and credit control tools in the free credit resources section.
Stephen Cowan
Yuill & Kyle, debt recovery & credit control lawyers, Scotland
79 West Regent Street, Glasgow G2 2AR
scowan@yuill-kyle.co.uk
Direct Dial: 0141-572-4251
www.debtscotland.com
www.ykcreditcheck.co.uk
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