The bill would bring Scotland into line with England and Wales

It would bring Scotland into line with England and Wales.

The period people declared bankrupt in Scotland must wait before they can raise finances again would be cut from three years to one.

Court involvement would be reduced. People would apply for bankruptcy through a Scottish Executive agency.

But those who had deliberately or knowingly run up debts would have an additional restriction period placed upon them, which could be anything up to 15 years.

New measures would also make it easier for creditors to make someone bankrupt, because in future they would go through the sheriff court, rather than the Court of Session, which would cut costs.

We want to help people to be able to clear their feet and get on with their lives and businesses Allan Wilson Deputy Enterprise Minister

The Bankruptcy and Diligence etc (Scotland) Bill, if passed next year, would place curbs on the right of creditors to sell a debtor's family home.

Bankruptcy restriction orders would be used to protect public and business interests.

Deputy Enterprise Minister Allan Wilson said: "People who can't pay their debts can become bankrupt through misfortune such as job loss or misjudging a risk.

"For these people the stigma associated with bankruptcy lingers for far too long and can lead to a fear of failure.

"We want to help people to be able to clear their feet and get on with their lives and businesses after a period of bankruptcy."

He added: "At the same time we don't want bankruptcy to be viewed as an easy option.

"There must be tough sanctions in place to deal with the minority of bankrupts who are a particular risk."

Tory concern

Changes would also overhaul the system of diligence - the legal process for enforcing orders for payment of money made by civil courts.

Proposals include a new protected minimum balance on arrested funds in bank accounts to help vulnerable debtors support themselves.

Mr Wilson continued: "This bill's provisions to reform diligence will strike a better balance in our system of debt enforcement.

"At the same time, it will create improved debtor protections to ensure that those people who owe money are treated with fairness and dignity."

An executive spokeswoman said the measures were based on 20 years of research and consultation by the Scottish Law Commission.

We remain convinced that one-year bankruptcies could be seen by some as a soft option for debtors Yvonne Gallacher Money Advice Scotland,

The Conservatives' enterprise spokesman, Murdo Fraser, said: "We must be careful that we are not making the option of bankruptcy too easy for those who simply do not wish to pay their debts.

"We will be scrutinising this legislation extremely carefully to ensure that a green light is not given to thousands of Scots to go down the bankruptcy route."

The charity Money Advice Scotland criticised moves to cut the period of bankruptcy.

Spokeswoman Yvonne Gallacher warned: "We remain convinced that one-year bankruptcies, if implemented, could be seen by some as a soft option for debtors.

"They may not be aware of all the risks attached to it and the possible impact on credit in the future."

You sent us your views on the proposed changes.

This is a great idea letting bankrupt off after 12 months and making it impossible to get at their house. I plan to exploit this by borrowing large sums of money, going to the casino and placing huge bets If I win I will be rich if not go bankrupt without any downside.
martin , Poole UK

I share Money Advice Scotland's concerns. Whilst there has to be encouragement given to Scots to be more entrepreneurial in their outlook (& thereby improve the wealth of the nation as a whole), a balance has also to be struck between making it too easy to walk away from any problems subsequently created as a result thereof. Perhaps three years would be a better balance?
Graham, Edinburgh

I work within a repossession department selling property that has been repossessed by lenders - sometimes as a result of insolvency proceedings. I don't agree with this Bill at all. If this debt is written off - who will pay for this? Consumers of every kind. The lenders will raise interest on loans and inevitably people starting the business will struggle all over again. It will create a never ending cycle. Can't the legislature see that this simply does not make any sense?
Catherine Morrow, Kilmarnock, Scotland

I work in insolvency and have seen the trend lean towards rescue rather than liquidate over the past 10 years. Fortunately the Dickensian days of Debtor Prison are long gone. However, with the increasing ease at which corporates and individuals have been able to obtain loans over the last 20+ years means that the laws need to keep pace with the business environment. For businesses current changes are intended to encourage entrepreneurs and provide a second chance when things go wrong (which there is a risk of - regardless of intellectual ability) there are many well known successful businessmen (and women) who have a failure behind them - some of which are qualified accountants. For individuals, it is a social mechanism allowing a way out, which is necessary in this climate of spend, spend spend. It is by no means the "soft option." Loan companies are sophisticated beasts and know what they are doing - hence higher risk individuals (people with low incomes, high debts, previous CCJs or bankruptcy) get to pay more in interest rates. Enslaving the debtor to a loan company/creditor until l a loan is paid in full would be tantamount to a return to the days of Charles Dickens' youth.
Christopher , London

It is all too easy to get your company into a mess and simply walk away from the debt. How many other people are then hit by this, because they don't get paid. Each case should be properly assessed and those who use the system should be prosecuted and prevented from starting up again.
David, Frodsham Cheshire

The supposed lack of an entrepreneurial culture in the UK is often compared unfavourably to that of the USA. I wonder how much of the difference is due to the relative harshness of UK bankruptcy law. My understanding is that in the USA one's home is protected from creditors by bankruptcy whereas most people looking to raise finance for a business must put their family home at risk; no wonder Britons are more cautious.
David Manning, Chelmsford, England

I think this is an appalling idea. What is going to happen to the economy when these debts are simply wiped off? Getting away with not paying your debt is a recipe for disaster - how are the courts to identify those who became bankrupt "through no fault of their own?" Only having one year before being discharged leaves the system wide open to abuse
Allison, Glasgow

People should also be aware that it will remain on their credit file for seven years. The actual period of bankruptcy, be it one or three years has no bearing on this whatsoever. Their credit rating will be about 0 or 1 points, not even enough to open a proper bank account, let alone buy a property, run a business or get credit cards for a big chunk of their lives.
Paul,

Although I don't in principle believe bankruptcy should be a soft option, if the option is available to community/sport volunteers who through no fault of their own are sued for everything but are able to retain the roof over their head in spite of a potentially large financial claim, then I think it could be a good thing.
Tom, Peth

Myself and my partner were bankrupted after our small business grew too fast without proper support from the bank. We ran out of working capital and the business debts mounted as customers delayed payment and large companies placed huge retentions on completed projects - 6 yrs later we have learned from this but still find it almost impossible to get finance for anything except at extraordinary interest rates. If customers had paid on time and retentions had been released sooner we could have avoided this terrible stigma.
Sharon, Kilbirnie

It's all too easy for individuals to access credit cards and bank loans, especially when they have money worries in the first instance. The worry then increases when they have to repay the amounts borrowed. There should be tighter regulations surrounding credit cards, their limits and bank loans. After all, it's not the big companies or banks who lose sleep at night!!
Tracey McDowall, Glasgow

A few years ago, due to ill health and a business partner doing a moonlight flit, I became heavily in debt almost overnight, losing 70% of my income. My bank was brutal, the finance companies worse. I turned for help to the Money Advice Unit at Trading Standards and they were wonderful as was my local MP. With their suggested reduced payments, a creditor took me to court for not paying enough. Despite Trading Standards doing a full professional assessment, presenting the court with full details and a comprehensive payment plan etc., the sheriff saw fit to find in favour of the finance company. Talk about wanting blood from a stone. Trading Standards and even the Clerk to the sheriff court were astonished at this unbelievable move. What did they want? Blood from a stone? This only served to ensure that we were forced to seek a Protected Trust Dead and now that creditor gets a fraction of what they demanded. Some justice in the end. I would advise anyone who gets into debt to seek the help of Trading Standards who are excellent. As for Dan's comments, I hope that one day life doesn't deal you an unexpected dud hand and YOU go down into the hell of debt. I suspect you'll change your tune then. We're not all malingerers.
Anon, Fife

I work within a repossession dept selling property that has been repossessed by lenders - sometimes as a result of insolvency proceedings. I don't agree with this Bill at all. If this debt is written off - who will pay for this? Consumers of every kind. The lenders will raise interest on loans and inevitably people starting the business will struggle all over again. It will create a never ending cycle. Can't the legislature see that this simply does not make any sense?
Catherine Morrow, Kilmarnock

I went into bankruptcy because my business did not bring in enough money. I can honestly say that my bank manager really helped me to not lose my house. Any changes in the law must try to ensure that a person who is declared insolvent through no fault of their own, other than trying to better themselves should at least be able to keep a roof over their heads.
John Moffat Smith, Dunfermline

I work in insolvency. I see people (mainly men) who start up their own businesses when clearly they have very little intellectual capabilities. They manage them so badly and are then surprised when things go wrong! If there was more control over who can start a company in the first place there would be far less bankruptcies.
Kerry, London

I am disgusted at how the system allows this at all! If someone owes money, why on earth would you want to cancel that? There is a blame culture that is growing and less people are willing to take the consequences of their actions. I do not believe that debt should be cancelled. They are going to be earning money for the rest of their lives so why not hold them to their promise of payment? (See any money note: "I promise to pay the bearer...�x). I think it is a wonderful idea to help those people in debt who want to help themselves.
Dan, Aberdeen

Bankruptcy can occur through no fault of the debtor. For instance, a man with a wife and children, losing his job, and the resultant breakdown of a marriage - and not wanting to deprive his family of their home - can find himself with huge liabilities, no assets, no income, and nowhere to live. Unless you want him living (and then dying) on the street or in debtors' prison there has to a mechanism for debt relief. Try thinking "there but for the grace of God..." rather than "pound of flesh". As long as consideration is made for those who deliberately rack up debt with the intention all along of absconding then these proposals are well intentioned and humane.
Gary, Watford, UK