£1,501 debt home loss threat branded "extreme"

Charites and church join to condemn proposed land attachment threshold

News, 21 March 2006

Charities have branded new proposals which could see householders lose their homes for debts of just £1,501 "extreme".

The homeless charity Shelter Scotland joined Citizens Advice Scotland and the Church of Scotland in condemning the "land attachment" measures set out in the Bankruptcy and Diligence Bill. The bill is due to be discussed today by Holyrood's Enterprise and Culture Committee.

The proposals would allow creditors to acquire security over a property for an unpaid debt of over £1,500 and if the debt is not repaid after six months, to apply to the sheriff to force a sale. They could apply to outstanding mortgage payments, unsecured loans, credit cards and store cards.

Archie Stoddart, the director of Shelter Scotland, said the proposals would put many homeowners at risk of losing their home. The average Scot has unsecured debts of £8,000.

The chief executive of Citizens Advice Scotland, Kaliani Lyle, said the move would effectively turn unsecured loans into secured ones and would allow creditors to charge high rates of interest.

The Church of Scotland added its concern, calling the idea that a new law might compel people to sell their homes for as little as a £1,501 debt "extreme". MSP Alex Neil, convener of the Enterprise Committee, said he and other members had received more emails about this particular issue than any other.

A spokesperson for the Scottish Executive said a creditor would not be able to sell a debtor's home without authorisation from a sheriff, and that there woud be six months' breathing space between the creditor obtaining security and applying to sell the property. The bill was designed to strike the right balance between effective protection for debtors against undue hardship, and effective recovery for creditors.