By Alan McIntosh
The Accountant in Bankruptcy has laid before the Scottish Parliament The Bankruptcy Fees Etc (Scotland) Regulations 2012.
These regulations will double the cost of a debtor’s application for bankruptcy from the 1st of June 2012 by 100% from £100 to £200.
This is the first indication the Scottish Government are intent on making the poorest pay more to obtain relief from their debts, which I warned of recently in my article in the Scottish Law Journal The Firm.
With approximately 42% of all bankruptcies being low income low asset applications (LILA) and many living on as little as £56.25 per week, this will mean up to 4 weeks income.
That’s four weeks where the money received is required to buy food, toiletries and pay heating bills.
What’s worse the Accountant in Bankruptcy have justified the price hike by making a comparison with the cost of bankruptcy applications in the rest of the UK, where the total cost is £700.
This fails to highlight, however, the fact the equivalent of a LILA application in England and Wales is a Debt Relief Order and is only £90.
So Scotland’s poorest will now pay double what debtor’s in the rest of the UK do.
They ominously justify the change with reference to the rising unit cost of administering a bankruptcy, due to reducing numbers of applications each year.
With many less now able to apply, the numbers will continue to fall and the costs will rise, meaning coupled with the swingeing cuts to the AIB’s funding, future hikes in prices will be inevitable.
In the sterile, statistic filled language of the AIB, what is missing is the human impact of these changes.
Bankruptcy is now primarily a debt relief remedy for some of Scotland’s poorest, providing them with protection from daily harassment and incessant demands from creditors to borrow more to pay off debts.
The AIB fees will now mean access to relief will be denied to many and more will turn to illegal money lenders and pay day loan companies to manage their debts.
The Scottish Government’s policy is not only reckless and uncompassionate; it’s incredibly harsh. It will force many into worse poverty.
The Regulations were laid before Parliament on the 20th of April and are subject to negative procedure.
This means unless another member of the Scottish Parliament makes a motion that they be annulled, they will be implemented.
I will not only be lobbying for a MSP to make such a motion but I am urging Citizen Advice Scotland and Money Advice Scotland to do the same.
Recently, Money Advice Scotland issued a statement in response to another article I wrote for The Firm. In which they stated their funding from the AIB “has not and will not constrain …[them]…from challenging government…”.
I was encouraged to hear this and hope they and Citizen Advice Scotland can unite to lead the sector and ensure wisdom prevails...before we all weep!