Ministers have come under pressure to drop what critics argue are ‘unlawful” state fees imposed on people seeking bankruptcy.
Some of the country’s most financially distressed debtors currently have to find at least £90 to access legal protection from their creditors.
Campaigning lawyers from the Govan Law Centre say they believe these fees would fall foul of a UK Supreme Court decision this week outlawing up-front payments for employment tribunals.
The centre’s principal solicitor, Mike Dailly, said he believed the fees, which are charged by a quango called the Accountant in Bankruptcy, were in breach of access to justice principles.
Mr Dailly said: “These are fees which are being paid by people who, by their very nature, have very little money. I think it is only fair that exemptions for fees be introduced in the light of the Supreme Court decision.”
The solicitor has written to Keith Brown, the cabinet secretary responsible for the economy, to scrap the fees or face a legal challenge.
The Scottish Government, however, responded by saying it believed the fees were perfectly lawful, paving the way for a potentially costly legal dispute.
Mr Dailly said: “We have clients who are ready to challenge this in the courts.”
When bankruptcies were dealt with by the courts the poorest people could apply for legal aid. Now, under the AiB, they pay a fixed fee of £90 for help from creditors if their debts are under £17,000 - and £200 if they owe more.
Fees paid in 2016-2017 totalled around £470,000, sums used to help support the work of AiB, which is based in Kilwinning, Ayrshire.
Mr Dailly’s team believe fees may be detering some people in financial distress from applying to AiB for assistance.
Payments for normal bankruptcies and the now discontinued “low income low asset” or LILA bankruptcies were introduced in 2012-13. This sparked a hike in applications before the change - and a drop after - as debtors tried to avoid the fee.
A spokesman for both the Scottish Government and AiB spokesman said: “We have noted the Supreme Court judgement and will consider it carefully. However, we are satisfied that fees for accessing bankruptcy are fully compliant with the law.
“Bankruptcy fees in Scotland compare very favourably with other jurisdictions around the world and we believe the current fee structure allows appropriate access to debt relief for those with unsustainable debt.
“We have already taken significant action to widen access to debt relief for the most financially vulnerable in society by introducing the Minimal Asset Process route into bankruptcy as part of wide-ranging reforms to bankruptcy legislation in April 2015.
“The £90 application fee for the Minimal Asset Process route into bankruptcy is substantially lower than the £200 fee in place prior to the introduction of the scheme.”
The UKSC said employment tribunal fees - designed to deter spurious claims - were illegal and ordered the UK Government to repay up to £32 million to claimants.
The embarrassing reverse for the UK Government - provoked by a legal challenge from the Unison trade union - has been widely welcomed in Scotland, including by SNP ministers.
Scottish Legal Affairs Minister Annabelle Ewing said: “We strongly opposed the introduction of employment tribunal fees and had committed to abolishing the fees when the management and operation of employment tribunals are devolved.”
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