This item was published during the term of a previous administration that ended in April 2007
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Bankruptcy proposals
18/11/2003
Proposals for new legislation to
modernise and improve the bankruptcy system in Scotland
have been published for consultation.
Enterprise Minister Jim Wallace
unveiled 'Personal Bankruptcy in Scotland: A Modern
Approach' which will form the basis for a new bill to amend
existing legislation. The consultation period for these
proposals ends on 20 February 2004.
Personal bankruptcy is the most
extreme form of debt resolution, with serious legal
consequences for the debtor. At present, in addition to
having their assets transferred to a trustee to be
distributed amongst their creditors, bankrupts are also
subject to certain disqualifications for a three year
period. These include restrictions on borrowing, not being
permitted to form a limited company, and not being
authorised to serve on certain public bodies.
The proposed changes aim to reduce the
stigma of bankruptcy and encourage responsible risk-taking,
whilst providing an effective regime to protect the public
and business community from the small minority of bankrupts
who have acted in a fraudulent manner.
Included in the consultation paper
is:
A reduction of the
bankruptcy period from three years to one
year.
New bankruptcy restriction
orders for those bankrupts who do not co-operate
with their trustee or are suspected of potentially
fraudulent action.
Encouraging people to seek
debt advice early to avoid the serious consequences
of bankruptcy.
Streamlined bankruptcy
proceedings with reduced court involvement to
improve bankruptcy systems.
Mr Wallace said:
"As I have stressed many times before,
economic growth is top of our agenda. I want to see a
culture of aspiration in Scotland where people are less
afraid of taking risks.
"Changing the bankruptcy laws is one
way in which we can achieve this, through reducing the
stigma of bankruptcy and encouraging responsible
risk-taking.
"It is important that we have a
modern, flexible bankruptcy system that meets the needs of
Scotland in the 21
st century. We aim to develop and refine the
existing bankruptcy laws, taking account of the needs of
Scotland's debtors, creditors and small businesses.
"Creditors, many of whom are small
businesses, need to be confident that there are adequate
systems in place to protect their interests and facilitate
debt recovery.
"The one year bankruptcy period would
be accompanied by appropriate safeguards to protect the
public and businesses as well as provision for ongoing
payments to creditors.
"It is also important that people are
reassured that if they suffer from unexpected hardship and
severe debt problems, there are humane solutions to help
them move forward with their lives."
Speaking about the proposed new one
year bankruptcy period for all bankrupts, Mr Wallace went
on:
"Reducing the bankruptcy period from
three years to one year is one of the key ways in which we
propose to reform existing legislation.
"This change would ensure consistency
with England and Wales, and will help ensure a level
playing field for businesses throughout the UK.
"We hope to encourage small business
bankrupts to set aside past experiences and move forward
with an entrepreneurial spirit."