Proponents of this change argue that it will increase the disincentive to incur debt and that a prolonged term of repayments will increase the return on money owed to creditors. Critics see no reason to modify the current system for duration, which was not significantly criticized during the consultation by any of the main interest groups.
In reality, trust deeds may need to be valid for much longer than four years. The Scottish Government has declared its intention to mandate that a trust deed provide a minimum dividend to creditors. They have proposed a range between 30p and 50p.
To meet this dividend level, a significant number of Scottish trust deeds will need to be extended to terms significantly longer than four years. For instance, a debtor who owes £25,000 and has a disposable income of £200 per month may require five or seven years to attain a 30p or 50p dividend. This estimate is based on an indicative cost estimate of £4,000 for the arrangement's operation.
It is believed that the goal is to direct more individuals towards the Debt Arrangement Scheme (DAS). DAS assists individuals in repaying their debts in full, protecting their assets, and avoiding insolvency. Nonetheless, many analysts believe that debtors who presently prefer to use a trust deed will opt for a four-year repayment term in bankruptcy rather than a Debt Arrangement Scheme.
The potential introduction of exclusions for debts incurred in the three months prior to signing a Scottish trust deed or declaring bankruptcy is a further source of concern. Individuals who have relied on credit to meet their daily requirements may discover that certain debts are not discharged in bankruptcy. Alternately, they may be required to wait several weeks before filing for personal bankruptcy that includes all of their debts.
ICAS, an organization that represents insolvency practitioners in Scotland, has expressed grave reservations regarding the proposed provisions of this Bankruptcy Bill. Recent press releases have questioned whether certain aspects of the current plan violate human rights laws. They have also questioned why the informed opinion of numerous debt professionals who participated in the consultation process appears to have been largely disregarded.
It appears that argument and negotiation will continue on these issues for some time. The current proposals appear to be very poor news for individuals and families in Scotland who experience financial difficulties in the future.""
" - https://www.affordablecebu.com/
