Tuesday, 4 June 2013

Time to remove financial barriers to bankruptcy for no income no asset Scots

Over the last year, the Scottish Government has erected major financial barriers to prevent Scottish consumers in extreme money difficulties with no income or assets to access bankruptcy and debt relief. Last April, the 'Low Income Low Asset bankruptcy' application fee was increased by 100% - from £100 to £200.

Speaking at Money Advice Scotland's annual conference in Glasgow, GLC's Principal Solicitor said it was time for the Scottish Government to realise that access to sequestration for Scots with no hope of ever getting out of debt was a constitutional right - an access to justice issue - and not something that should be regarded as a commodity with financial barriers to overcome in order to access it.

GLC's Mike Dailly noted that Scotland had seen a fall in personal bankruptcies by 21% in the last year – with a 58% drop in the debtor Low Income Low Asset (LILA) applications since the application fee was increased by 100% last year. 

While the Enterprise Minister, Fergus Ewing, had welcomed these figures as ‘reassuring news’ and an indicator of economic growth the truth is that the Scottish Government had financially excluded thousands of Scots from debt relief. In so doing, it had exposed financial vulnerable Scots to the human misery of being hounded by creditors when they have no hope of ever clearing their bills.

The Scottish Government's forthcoming bankruptcy bill seeks to reform the LILA system yet according to GLC the plans appear to be unworkable, exclusive, and unfair. 

For example, the new system will only be available to Scots in receipt of welfare benefits, but only where they have been in receipt of benefits for six months. It will be available to be used once every ten years for applicants, and as the Accountant in Bankruptcy's office confirmed yesterday, it will only be accessible upon payment of a fee with no exemptions - unlike the court system which exempts litigants from paying court fees where they are in receipt of certain benefits.

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