MSE News: New Scottish bankruptcy law 'will cause misery', debt groups say

Options
"Plans to make people in Scotland who are made bankrupt pay debts for four years rather than three will lead to "increased human misery" for people in financial crisis, debt advice groups are warning..."
Read the full story:

New Scottish bankruptcy law 'will cause misery', debt groups say

OfficialStamp.gif

Click reply below to discuss. If you haven’t already, join the forum to reply. If you aren’t sure how it all works, read our New to Forum? Intro Guide.
«134

Comments

  • fermi
    fermi Posts: 40,546 Forumite
    First Anniversary First Post Combo Breaker Intrepid Forum Explorer
    Options
    Across the UK, bankruptcy usually lasts for a year. But in Scotland and Northern Ireland, you may be expected to make regular contributions to your debts for up to three years
    No "but". It's the same in England.
    Free/impartial debt advice: National Debtline | StepChange Debt Charity | Find your local CAB

    IVA & fee charging DMP companies: Profits from misery, motivated ONLY by greed
  • jamesd
    jamesd Posts: 26,103 Forumite
    Name Dropper First Post First Anniversary
    edited 16 December 2013 at 6:35PM
    Options
    Do you have some statistics to support a claim that English bankrupts are usually required to make payments for more than one year? Some are, but it hasn't been my impression that it's the majority and I'd welcome data to correct that if it's wrong.

    The story contains the quote "You are expecting people to live without disposable income, with only enough to pay essentials. Long term, that is unsustainable as cars break down, shoes need replacing, kids require new school clothes and boilers need replacing" I had the impression that all of the listed expenses could be allowed for within bankruptcy. How correct or incorrect is the quoted claim that nothing is allowed for such things, with no adjustment permitted at all for contingencies either?
  • fermi
    fermi Posts: 40,546 Forumite
    First Anniversary First Post Combo Breaker Intrepid Forum Explorer
    Options
    Last year 20.1% of bankrupts in England had Income Payment arrangements agreed. The standard/maximum terms of those agreements is 3 years. Payments go according to disposable income, so actual payments can vary across the term from £0 upwards, and in some cases agreements can be discharged if an adverse change is permanent. So a broad spectrum.
    Free/impartial debt advice: National Debtline | StepChange Debt Charity | Find your local CAB

    IVA & fee charging DMP companies: Profits from misery, motivated ONLY by greed
  • National_Debtline
    National_Debtline Posts: 7,998 Organisation Representative
    First Post First Anniversary Combo Breaker
    Options
    jamesd wrote: »
    I had the impression that all of the listed expenses could be allowed for within bankruptcy. How correct or incorrect is the quoted claim that nothing is allowed for such things, with no adjustment permitted at all for contingencies either?

    Hello there,

    We would allow reasonable amounts to cover such items within our financial statements. I understand that both the Insolvency Service and the Accountant in Bankruptcy would have a similar approach.

    David @ NDL.
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
  • TheGardener
    TheGardener Posts: 3,303 Forumite
    Name Dropper First Anniversary First Post
    Options
    Disappointing that an MSE report is so poorly worded - the UK term for IPA's is 3 years too but the item suggests it's only a year.
    I thought this comment
    "A Scottish Government spokesperson says: "We consulted on this proposal and the majority of stakeholders who expressed a preference preferred a longer contribution period for bankruptcy of five years." was very telling...a hint of that perception that all BR's are crooks an thieves. It will be back to the debtors prison soon in Scotland!! :(
  • philnicandevan
    Options
    Hmm...you might has well have worded the title "trolls come on in all welcome"
    Not quite a newbie as you think ;);) (the member formally known as philnicandamy!)

    FINALLY a qualified CAB debt caseworker 2015..:p
    BSC 58 :D
  • jamesd
    jamesd Posts: 26,103 Forumite
    Name Dropper First Post First Anniversary
    edited 17 December 2013 at 11:01AM
    Options
    The purpose of bankruptcy is to give people in severe financial difficulty a way out when it's clear that there is no sensible alternative solution. It's quite possible for someone to say be injured and unable to do their normal work while having debts that were completely affordable when they were working. In that and a wide range of other cases like small business failure it's sensible to have some way out. Bankruptcy is that way and it serves a useful purpose. Those who have credit trouble get most of the adverse press coverage but there's far more to that and if you read the DFW section here you'll see that many of those with debt trouble just didn't realise what they were getting into and need help to get out of it.

    Fremi, thanks. That seems to support the story's statement that "Across the UK, bankruptcy usually lasts for a year" and the use of the word but. With about 80% not having an IPA and I assume all or almost all of that 80% being discharged after a year now the story seems right in that respect.

    What's less clear is how the Scottish story differs, since the story implies that 100% of those in Scotland would be required to pay. I don't know the Scottish situation well enough to know if that's true or whether there's the same sort of 80% not paying situation as in England. If it's pretty much the same, that whole paragraph might have been best not being present in the story at all... :)

    David @ NDL, thanks, glad I wasn't wrong about that - I'm all for a decent chance for people to recover and that does require a reasonable amount to live on!
  • Utseya123
    Options
    The key point to consider is not whether the new bankruptcy law is better or worse compared to the others in UK but whether the ills that plague the existing law are being plugged both from the point of view of the lender and the person seeking the bankruptcy. The law needs to protect the interests of both the groups so that on one hand people are not put through untold hardships and on the other, one does not cheat lenders by conveniently going in for bankruptcy.
  • alastairq
    alastairq Posts: 5,030 Forumite
    Options
    Darryl Chamberlain needs to re-write some of that text, as it is misleading, or just downright incorrect!

    Having read the article, I understand the gist of it to mean, the Scots are viewing a proposal to extend their time period for the [rest of the UK's] equivalent of an IPA/IPO.

    I suspect this is an attempt to offset the considerable administrative costs of a BR....rather than to try and return further monies to creditors.

    If a two-tier UK BR system emerges, then I suspect , prior to petitioning a BR, folk might just re-locate?
    No, I don't think all other drivers are idiots......but some are determined to change my mind.......
  • SimonSays
    Options
    Whats wrong with expecting bankrupts to pay towards what they owe? They ran it up. There are many reasons that people go bankrupt. But it is fair they pay back what they owe.
This discussion has been closed.
Meet your Ambassadors

Categories

  • All Categories
  • 343.6K Banking & Borrowing
  • 250.2K Reduce Debt & Boost Income
  • 449.9K Spending & Discounts
  • 235.8K Work, Benefits & Business
  • 608.8K Mortgages, Homes & Bills
  • 173.3K Life & Family
  • 248.4K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards