A newly introduced bill in Scotland aims to balance the needs of debtors and creditors, with access to a bankruptcy process that is fair for all, and mandatory financial education for those who are unable to effectively
manage their own finances.
The Bankruptcy and Debt Advice (Scotland) Bill 2013 was published by the Scottish Government earlier this month, and incorporates significant reform of the pre-existing system in the country.
Its three stated overall objectives are:
- to provide access to fair and just debt advice, relief and management for the people of Scotland;
- to ensure that people who can pay their debts do so, but with awareness of the circumstances that can make it impossible to do so;
- to “secure the best return for creditors” by ensuring their rights and needs are given fair weight in the law.
Balancing the needs of lenders and borrowers in this way is a challenge the Bill is specifically designed to overcome, with a designated financial instrument devoted to the task.
The Common Financial Tool is unique to Scotland and is intended for use by financial advisors, helping them to assess income and outgoings in order to allow for a consistent view of any individual’s ability to service their debts.
In its description of the Bill, the Scottish equivalent of the Insolvency Service, Accountant in Bankruptcy, states: “The Scottish Government will do all it can to encourage individuals to seek advice where this would be more appropriate than seeking credit.”