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Personal debt
13/01/2009
A panel of experts is to be set up to make sure the Scottish Government does everything in its power to give support to people struggling with personal debt.
The Debt Action Forum, chaired by Community Safety Minister Fergus Ewing, will examine information and initiatives on debt relief, debt advice and repossession and recommend a package of legislative and non-legislative measures to tackle the issues.
Mr Ewing also announced improvements to the Debt Arrangement Scheme which helps people with a disposable income pay back their debts over a longer period, free from the threat of legal action.
Speaking at the Money Advice Scotland conference, Mr Ewing also renewed the Scottish Government's call for the UK Government to do more to tackle irresponsible lending.
Mr Ewing said:
"2009 will be a year of change for everyone. The economic conditions are expected to last into 2010 and the Scottish Government already has a full programme of work underway in response to the impact of the credit crunch and recession.
"The new Debt Action Forum will build on this by making sure we work with professionals and stakeholders to provide appropriate solutions and protections to help Scots who are struggling with debt and to provide safeguards to protect family homes.
"In light of increasing concerns about rising numbers of repossessions the Scottish Government will also set up a sub group of the Debt Action Forum to look specifically at the issue of repossessions.
"This will look at whether the legal protection for homeowners in Scotland is adequate or needs strengthened. We will ask this sub-group to consider what else the Government and others such as lenders, advice agencies and legal services might do to help reduce the risk of repossessions.
"It is important that we act quickly and decisively where we can. That's why I'm also making changes to improve the Debt Arrangement Scheme.
"This will mean that anyone who is able to repay their debts in full, but needs breathing space, will be able to use the Debt Arrangement Scheme to pay their debts in a single monthly payment plan, free from the threat of legal action and without jeopardising their family home.
"This also ensures that vulnerable creditors, such as small businesses, who are owed money will know that an income stream is in place and save them from administering bad debt.
"A new online application process will make access to the scheme easier and more user friendly. While moving the administration of the scheme to the Accountant in Bankruptcy will allow organisations such as Citizens Advice Bureaux to focus on providing advice to Scots who are struggling.
"While we are able to deal with the consequences of debt we need the UK Government to deal with the causes - as we don't have power over the Consumer Credit Act. That's why we will keep pressing them to do more to protect people from irresponsible lending.
"Meanwhile the Scottish Government will continue to do absolutely everything we can to support Scottish business and families as part of our Economic Recovery Programme."
The first meeting of the Debt Action Forum will take place on January 21. Organisations including the Scottish Law Commission, The Law Society of Scotland, the Institute of Chartered Accountants, the Legal Services Agency, Citizens Advice Scotland, Money Advice Scotland, the Council of Scottish Clearing Banks and the Confederation of Scottish Local Authorities have been invited to send a representative.
The changes to the Debt Arrangement Scheme will phased in over the coming months.