UK Government To Make It Easier For Bankrupts To Get Bank Accounts

Consumer Minister Jo Swinson has announced that the UK Government will now bring forward legislative changes to Section 307 of the Insolvency Act 1986 to make it easier for undischarged bankrupts to obtain bank accounts.

The proposals are contained in the UK Government’s response to an earlier consultation carried out by the UK Insolvency Service which looked at bank accounts for bankrupts.

The Consultation discovered that only 27% of bankrupts were able to retain accounts after becoming bankrupt, whilst 55% would struggle temporarily before getting a new account and 18% would not be able to obtain a new account.

Only Barclays is currently providing basic accounts to undischarged bankrupts after the Co-operative Bank decided earlier this year to withdraw its service.

The changes will not force banks to provide accounts to undischarged bankrupts and the Co-operative Bank has indicated it will only look at reversing its decision if other banks begin offering the service.

The provisions will not extend to Scotland and the Scottish Government has not indicated whether they believe similar reform to scots law is necessary.

A new bankruptcy bill is due to be tabled by the Scottish Government later in this parliament. 


Policy Head at Citizen Advice says there's too much Forebearance

The Director at Citizen Advice in charge of Policy and Advocacy will say today when speaking at a Consumer Credit debate, that lenders are  giving debtor's too much foreberance.

Teresa Perchard is expected to say : "Successive governments have put pressure on lenders to put off foreclosure. Too many people have got forbearance and I’m beginning to become concerned.

“Perhaps they’re not having constructive advice, as is forbearance the best option when the there’s no prospect of the debtor paying up?”

She added: “I want to see a proactive but not aggressive way of dealing with debtors not too fast but not too slow.”



Latest Insolvency Figures Released

 The Accountant in Bankruptcy's office has released the fourth quarter insolvency figures for 2011/12.

The latest statistics show the number of sequestrations have fallen slightly since the last quarter and by 3% on the same period last year. 

Protected Trust Deeds have increased by 10% in this quarter and by 43% on the corresponding period last year.

Debt Payment Programmes are up 7% on the last quarter and by 97% on the same period last year. 

Government Minister Fergus Ewing said:

"Personal insolvencies have increased slightly this quarter due to an increase in protected trust deeds, although it is encouraging to see that, overall, bankruptcies have shown no increase compared to last quarter."
“I am pleased to see that the Debt Arrangement Scheme continues to see an increase in debt payment programmes approved, following AiB’s continuing efforts to raise awareness of the Scheme and its benefits. The freezing of interest and charges for debtors and a return of at least 90 per cent for creditors makes this a good option for both parties.”




Cost of Debtor Applications to Increase By 100%


The Scottish Government have laid before the Scottish Parliament The Bankruptcy Fee Etc (Scotland) Regulations 2012, proposing massive hikes to the cost of debtor applications for bankruptcy, from £100 to £200.

Fears of such fee hikes were highlighted previously by Carrington Dean's Alan McIntosh in an article in the Scottish Law Journal, the Firm.

The changes, which are not part of the current Bankruptcy Law Reforms, are being justified as part of the Scottish Government's move towards full cost recovery for the Accountant in Bankruptcy (AIB).

They are also being justified because of the 60% funding cuts the agency has suffered over the last two years and the declining number of bankruptcy awards: resulting in increased costs to the administration of each bankruptcy.

The Scottish Government have also defended the hikes by comparing costs of debtor applications in Scotland with those elsewhere in the UK, where the cost is £700.

This, however, does not address the fact that of the approximate 42% of sequestrations in Scotland which are Low Income Low Asset cases, the equivalent Debt Relief Order elsewhere cost only £90 to apply.

Other Increases will be to the AIB's supervison fee for Protected Trust Deeds which will rise from £250 per trust deed to £100 per year, meaning a 3 year trust deed will now cost £300 or £400 for a 4 year trust deed.

The fee changes will be implemented from the 1st of June 2012 and the 1st of July 2012, with the debtor application fee change taking effect from the 1st of June.

...And Jesus Wept.

Read Alan McIntosh's Blog on the fee changes

 Further fee changes are:




Advice Service Urges Debtors Not To Turn To Pay Day Loans

Shelter Scotland’s Tayside Housing Law and Debt Advice Project, which has operated from Dundee for over two years is urging local residents to seek help sooner rather than later and not to turn to payday loan firms after Tayside Police urged residents not to turn to illegal money lenders in these difficult times.

The service is available to people living across Dundee, Perth & Kinross, Angus, Stirling, Falkirk and Clackmannanshire and has helped over 300 families avoid eviction and repossession from their homes. 

Matt Locke of the service said:

“In these difficult times it doesn’t take much for household finances to go from being relatively secure to absolute crisis point. A growing number of families are living on a knife edge, with only a couple of pay-cheques standing between them and major financial difficulty.

“The Tayside families we help are struggling because of the recession and many feel they had no choice but to take out a payday loan to support their families. But it’s far from a solution. All such loans do is make the problem much worse in the long run.

“When things start collapsing around them, people often put their head in the sand. If they come to us sooner we can do more to help – there’s always hope.”

To contact the advice hotline, call 0344 515 2527 or email