ICAS warns of Scottish bankruptcy confusion

The two pieces of legislation in question are the proposed bankruptcy legislation and the new debt arrangement scheme (DAS).

Under DAS, debts will be paid in full over three to five years with the help of debt advisors, while a draft Bankruptcy Bill, to be published in June 2004, is expected, if it follows the English bankruptcy system, to allow bankrupts to be discharged after a maximum of 1 year.

ICAS said the two option would leave those in debt with a 'stark moral choice' of whether debts should be paid in full or 'forgiven' under the bankruptcy route.

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Bruce Cartwright, chairman of the ICAS Insolvency Committee, said: 'The debt arrangement scheme allows for individual debtors to apply to have a debt arrangement programme approved during which no creditors can enforce judgement. But this legislation makes no provision for freeze on interest or part payment to wipe out the entire debt.

'I think we are encouraging an environment where the "individual of conscience" does his or her utmost to meet their obligations by voluntary means while we are offering them a less onerous alternative: forget the past and try again.'