Shelter said the plans would put people at risk of losing their home

Land attachment proposals contained in the Bankruptcy Bill would have enabled creditors to apply for property rights if debts of �1,500 could not be paid.

Scottish charities Shelter and Citizens Advice said the plan was heavy-handed.

The committee has now recommended the proposals are dropped. Its Stage One report on the Bill will be debated in the Scottish Parliament next week.

Committee convenor Alex Neil said: "Having listened to evidence from witnesses including Shelter and Citizens Advice Scotland, we would urge the Scottish Executive to bring forward amendments to exclude a debtor's main dwelling from the scope of this proposals.

No-one should lose their home for a debt of �1,501 Archie Stoddart Shelter Scotland director

"We believe that there should be a presumption against selling a home to recover a debt if the end result is homelessness."

Housing charity Shelter Scotland welcomed the decision to reject the proposals.

Archie Stoddart, director of the charity, said: "The proposed land attachments could have worked in direct contradiction to Scotland's progressive homelessness legislation by putting many home-owners at risk of losing their home.

"No-one should lose their home for a debt of �1,501.

"It is important now that the minister responds to the committee's recommendation on land attachments."

Fairer balance

Citizens Advice Scotland's chief executive Kaliani Lyle said the charity feared the proposals would enable unscrupulous creditors to intimidate debtors with the threat of losing their home.

"People might then feel pressured into agreeing unsustainable repayment plans, borrowing money from elsewhere or paying one creditor at the expense of others," she added.

The Bankruptcy and Diligence Bill is intended to strike a fairer balance between the rights of the debtor and those owed money.