IN Scotland two and a half years ago when the reforms to bankruptcy legislation were going through the Scottish Parliament it emerged that around 1/2 of creditor initiated bankruptcies were commenced by local authorities, in a number of cases for unpaid poll tax. The figure seemed startling then – but seemed a corollary of a decision by local authorities to avoid using traditional debt enforcement mechanisms whereby assets of the debtor (goods or bank accounts) were seized (execution of judgments in England, diligence in Scotland). There was considerable political pressure from the old SSP, the SNP, and the left of the Labour party to avoid using what was perceived as “inhuman and degrading” debt enforcement mechanisms – with the result that bankruptcy was used as the only means of debt recovery – which for the debtor meant seizing all of the assets that could be seized by the usual mechanisms, preventing the obtaining of credit, and effectively seizing assets acquired after bankruptcy (albeit with a discharge of all debts after years).

We don’t have any stats yet on how the reduction of the discharge period from 3 years to 1(mirroring the English reforms of a few years ago) has had on local authority practice, but there has been a massive increase in debtor initiated applications, and reduction in creditor initiated applications (possibly because previously debtor initiated procedures were not straightforward and a helpful creditor may have assisted the debtor to get bankruptcy relief. If that is the case iti is likely that in Scotland the percentage of local authority initiated bankruptcies may overall be reduced, but as a proportion of creditor initiated bankruptcies will probably go up.

Whether similar factors apply in England and Wales I’d be really interested to know if anyone can help.