Bankruptcies 'Set to Soar' Now Scots Can Ditch Debt for [Pounds Sterling]100; Drowning in Debt: But Bankruptcy Is Quicker and Cheaper
Byline: Stuart Nicolson
SCOTLAND is facing a flood of debt-ridden people declaring themselvesbankrupt, it was warned yesterday.
New laws coming into force today make it easier for people to write off theirdebts.
And with many struggling to cope with the impact of the credit crunch, expertspredict a deluge of personal bankruptcies in the months ahead.
The change in the law, which brings Scotland into line with the rest of the UK,reduces the amount of time a person has to serve as a bankrupt from three yearsto just one.
When a similar change was introduced in England and Wales, the number of peopledeclaring themselves insolvent rocketed.
Personal insolvencies north of the Border are already at an all-time high, withalmost 40 people a day going bust. But the figure is set to soar as banks andlenders turn the screw tighter on those who have already pushed credit card andloan spending to the limit.
Nick Robinson, chairman of Independent Insolvency Practitioners, a companyoperated by 25 independent insolvency firms in Scotland, said while the newrules on bankruptcy were wellintentioned, they were likely to be 'exploited' bymany facing a mountain of personal debt.
He said: 'It was designed to afford an easier avenue into the protection ofbankruptcy for people who had unwittingly, or through unfortunate personalcircumstances, allowed their debt position to become hopeless and unresolvable.
'In fact, I predict Northern Rock-style queues up the high street for CitizensAdvice Bureaux and money advice centres as the word spreads about how simple itnow is to ditch your debt.' The old rules meant people could only declarethemselves bankrupt if a creditor had served a payment notice against them.
From today, however, people will be able to make themselves insolvent if theyhave debts of more than [pounds sterling]3,000, or if they have no combined assets worth morethan [pounds sterling]10,000. If they meet the new criteria, they can declare themselvesbankrupt for a fee of only [pounds sterling]100. …