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Debt panel set up

13 January 2009

An expert panel is to be set up to make sure the Scottish Government does everything it can to support people struggling with personal debt.

The Debt Action Forum, chaired by Community Safety Minister Fergus Ewing, will look at information and initiatives on debt relief, debt advice and repossession and recommend legislative and non-legislative measures to tackle the issues.

Mr Ewing has also announced improvements to the Debt Arrangement Scheme, which helps people with a disposable income pay back their debts over a longer period, free from the threat of legal action.

Speaking at a Money Advice Scotland conference today, Mr Ewing said that the current economic conditions were expected to last into 2010 and the Scottish Government was already working to tackle the credit crunch and recession.

Focus on repossessions

He explained: "The new Debt Action Forum will build on this by making sure we work with professionals and stakeholders to provide appropriate solutions and protections to help Scots who are struggling with debt and to provide safeguards to protect family homes.

"In light of increasing concerns about rising numbers of repossessions, the Scottish Government will also set up a sub-group of the Debt Action Forum to look specifically at the issue of repossessions.

"This will look at whether the legal protection for homeowners in Scotland is adequate or needs strengthened. We will ask this sub-group to consider what else the Government and others, such as lenders, advice agencies and legal services, might do to help reduce the risk of repossessions.”

The Debt Arrangement Scheme will allow anyone who is able to repay their debts in full, but who needs breathing space, to do so in a single monthly payment plan, without the threat of legal action and without jeopardising their family home.

New admin set-up

Mr Ewing said the scheme should also help vulnerable creditors, such as small businesses that are owed money, know that an income stream was in place and save them from administering bad debt.

He added: "A new online application process will make access to the scheme easier and more user friendly. Moving the administration of the scheme to the Accountant in Bankruptcy will allow organisations such as Citizens Advice Bureaux to focus on providing advice to Scots who are struggling.”

The minister also urged the UK Government to toughen up the Consumer Credit Act and make it easier to protect people from irresponsible lending.

The first meeting of the Debt Action Forum will take place later this month. Organisations including the Scottish Law Commission, the Law Society of Scotland, the Institute of Chartered Accountants in Scotland, the Legal Services Agency, Citizens Advice Scotland and Money Advice Scotland have been invited to attend.

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