Debt scheme rethink welcomed

Jul 1 2009 by Kenny Smith, Rutherglen Reformer

GLASGOW Liberal Democrat MSP Robert Brown has welcomed a Scottish Government U-turn on alterations to debt repayment procedures after he lodged a motion to annul new rules on the current Debt Arrangement Scheme.

The annulment procedure is rarely necessary but representations from Citizens’ Advice Scotland and Money Advice Scotland, among others, claimed the SNP Government had not thought the matter through properly, and that a significant number of people in financial difficulties might lose out.

The SNP changes would have introduced a minimum monthly payment amount for those in debt repayment of either £100 or one per cent of the total sum, and also imposed a maximum repayment limit of 100 months, which could limit the number eligible for the scheme.

Most people in this sort of extreme financial difficulty need professional money advice to help them sort out their affairs.

However, Government proposals would have simplified the bureaucracy of the scheme whilst knocking out the availability of money advice, which would have been a bad move.

The Debt Arrangement Scheme was set up in 2004 to help those struggling with debt. As long as people meet their repayments, interest is frozen, diligence such as wage arrestment is prevented and creditors aren’t allowed to add any extra late payment fees or charges and must let debtors pay up according to the scheme rules.

Robert Brown, from Burnside, is a former chair of Rutherglen and Cambuslang Citizens’ Advice Bureau. He said: “These proposals were not properly thought through.

“The concerns raised by myself and others at the Justice Committee forced the Scottish Government to rethink their proposed changes to the Debt Arrangement Scheme.

“Indeed they signed the revocation of the Order only minutes before the minister came to committee to defend the proposals.

“This is another example of SNP ministers not doing their research or carrying out proper consultation. It is the second time in recent months that the Justice Secretary has been forced to withdraw a Parliamentary Order of serious importance.

“In the current financial crisis the Scottish Government should be increasing support to people dealing with debt problems, not cutting their access to help. Just last week we heard from Citizens’ Advice Scotland (CAB) about people drowning in debt.

“According to CAB, many families will forego food or heating in order to pay bills and two-fifths of those asked reported that they had been pressured or harassed about their debts while twice as many as previously thought had been threatened with unlawful collection methods. This is unacceptable and it’s precisely for reasons like this that we need an effective Debt Arrangement Scheme.

“Against this backdrop, I’m delighted that the Scottish Government have chosen to think again about their proposals to restrict those who can access the Debt Arrangement Scheme. The proposals are to be revised and a full consultation carried out. This should have happened in the first place.”