People need a payday loan to declare bankruptcy in Scotland

INDUSTRY ROUNDUP WEEK ENDING 8 FEB 2013

In a decision that was supposedly to make the bankruptcy system in Scotland help pay for itself, the fees for becoming bankrupt were increased from £100 to £200 in June of last year. However, this has led to absolute shedloads of financially crippled Scots having to finance their bankruptcy fees by turning to the only lender they can – a payday advance provider.

£200 may not sound like much, considering it can be hundreds of pounds more south of the border, but for cash-strapped Scots approaching financial ruination due to out-of-control debts, even the relatively low bankruptcy fee of £200 might as well be £2 million in that either way it would be impossible to scrape up that kind of cash. Of course, someone who needs to declare their bankruptcy couldn’t possibly qualify for a loan from a traditional lender, considering the most likely massive debts they’ve incurred and the absolute shambles their credit history most likely is, opening the door for the moustache-twirling villains of the lending world – those pernicious purveyors of high interest rate short term loans – to get their claws into just a few more victims.

As if this wasn’t bad enough, there’s rumours swirling about of an a new draft to an insolvency bill that would leave bankrupts that have to borrow from a payday lender still responsible for the debt even after paying their bankruptcy fee. The language of the draft includes a clause which excludes any debts from being written off if they are incurred up to a few weeks prior to the bankruptcy filing, which would start off a new bankrupt with a nice, big, fat bit of unsustainable debt to deal with even after they scraped up the cash to get rid of the monkey on their back in the first place; hardly seems fair, does it?

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