I. Ministerial Foreword
Ensuring that the people of Scotland have access to the appropriate debt relief mechanisms is a key priority of the Scottish Government. The recent economic crisis has impacted on many people and this has underlined the need for strong Government intervention.
Protected Trust Deeds are one of a range of measures available to people across Scotland, offering a helpful debt remedy. I want to further strengthen this product to ensure that it is fair to creditors and debtors alike, assisting in the financial rehabilitation of individuals and minimising the impact on the Scottish economy. This consultation builds on the strong focus there has been on Protected Trust Deeds in recent years. It sets out a number of suggestions for improvements to the Protected Trust Deed process in Scotland.
Following the implementation of the Bankruptcy and Diligence etc. (Scotland) Act 2007 a review of Protected Trust Deeds was conducted. This review concluded that modification of the current Protected Trust Deed process was required to extend this debt relief solution to a wider section of the population. This, and further reviews, have also shown that in a significant percentage of Protected Trust Deeds no return is made to creditors.
The Debt Action Forum which met in 2009 considered the suggestion that there may be scope to encourage more use of Protected Trust Deeds as a tool for debtors who can pay back part of what they owe. The group that was set up subsequently, the Protected Trust Deeds Working Group, was established solely to examine the trust deed process and to suggest improvements.
This group, chaired by the Accountant In Bankruptcy, contained representatives of those with an interest in trust deeds, including creditors and insolvency practitioners as well as the money advice sector. It made several recommendations in its Report published in June 2010 and it is on these recommendations, in the main, that this consultation focuses.
This consultation is the first step in a wider look at Protected Trust Deeds, how they fit into the range of debt products in Scotland and the potential for more radical changes. In any debt solution, although account must be taken of a debtor's circumstances, a fair return to creditors is vital.
Recent changes to the Debt Arrangement Scheme ( DAS) allow more people to access and benefit from it. I hope that people who can pay back their debts, but over a longer time, access DAS as their first option in taking control of their debt. Increased use of this Scheme where appropriate, rather than Protected Trust Deeds, will lead to improved returns for creditors.
In some cases, however, a Protected Trust Deed is the best option and the proposals contained in this consultation are intended to simplify the Protected Trust Deed process and provide a greater return to creditors. The Scottish Government will review any legislative changes which are introduced as a result of this consultation twelve months after commencement to ensure that they are producing the desired results.
I invite all interested parties to assist in the further development of the Protected Trust Deed process by giving your views.
Fergus Ewing, MSP
Minister for Energy, Enterprise and Tourism
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