Section 4 — Effect of debt payment programmes

Part of Debt Arrangement and Attachment (Scotland) Bill: Stage 3 – in the Scottish Parliament at 3:45 pm on 13th November 2002.

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Photo of Tommy Sheridan Tommy Sheridan SSP 3:45 pm, 13th November 2002

Amendments 35 and 38 both attempt to ensure that when debts are being repaid as part of a debt arrangement scheme, they debts cannot be enforced by the use of other diligences.

It is important to note that when respondents to the Scottish Executive's consultation document, "Enforcement of Civil Obligations in Scotland", were asked whether enforcement should be stopped once a debt arrangement scheme application has been granted, 42 consultees said that it should be stopped while only three said that it should not be. If amendment 35 is disagreed to, it would still be possible to enforce debts that are subject to a debt arrangement scheme. I hope that the minister will address that point, because during stage 2, he said that he would return to the matter. Debts that are subject to a debt arrangement scheme should be ring fenced or protected.

For example, a debtor could agree to pay a mortgage or second loan secured on a house within a debt arrangement scheme. Even if the scheme were approved and payments were being made, it would still be possible for the creditor to serve a calling-up notice against the debt under the Conveyancing and Feudal Reform (Scotland) Act 1970. Such a notice would require the debtor to repay the loan, failing which ownership of the house would be transferred to the creditor.

A calling-up notice is not a diligence; it is a statutory remedy under the 1970 act that arises on breach of a loan secured on heritable property. It does not operate by decree and is not caught by section 4 as drafted. Amendment 35 would plug that loophole and therefore take on board the almost overwhelming view of respondents to the consultation that debts that are repaid within a debt arrangement scheme should not be subject to enforcement. During stage 2, the minister felt that that point had some validity and promised to examine it. As a result, I hope that he will agree to support amendments 35 and 38.

Amendment 38 would address the situation in which a creditor who gets a decree for payment can use it to serve an inhibition, which prevents a debtor from selling his or her house. I suggest that, if the debt is being repaid within a debt arrangement scheme, it is fair and sensible for any inhibition to fall once the scheme is approved. At present, the bill does not deal with any existing diligence; section 4 prevents future diligence only from being used against debts under the debt arrangement scheme. Again, I refer members to the Executive's recent public consultation, in which 93 per cent of respondents said that enforcement should stop where debts were being repaid with a debt arrangement scheme.

Amendments 35 and 38 are entirely consistent with the results of the Executive's wide-ranging consultation, which the minister said, throughout stage 2, he was awaiting. We have now received those results and he will see that my amendments are in line with them. I hope that that means that he will support my amendments.

I move amendment 35.