The Scottish Executive introduce a new route to bankruptcy as a solution for financially vunerable debtors.
After the extravagance of Christmas, the Scottish Government have today announced a new scheme to ease the burden of excessive debt on those who can least afford it. The so called ‘Low income, low asset’ scheme has been designed to provide a new route to bankruptcy for those who face this as their only realistic option.
Currently there is a subset of society who are struggling with serious debt, are unable to meet required repayments each month but have not been pursued to court by their creditors as because of the borrowers few assets, the creditor holds no hope of reclaiming what they owe and so simply continue to add interest and charges to the amount borrowed. This leaves financially vulnerable individuals in a catch-22 situation; they can’t afford to repay their debts but they’re unable to declare themselves insolvent either leaving them with no way out.
The new scheme announced by Fergus Ewing, Minister for Community Safety, allows these individuals to declare themselves bankrupt providing they meet certain criteria. To be eligible an individual must be found to earn less than £220 a week (as this represents the amount earned in a 40 hour week on the national minimum wage) and have assets totaling less than £1,000.
The ‘low income low asset’ route to bankruptcy has been designed with minimal cost to make the option affordable for all. For this reason the application charge has been set at a flat £100 payment.
This move has been supported by UK debt support charities with Chief Executive Officer of Citizens Advice Scotland, Kaliani Lyle, says “We have long argued for the need for more effective debt relief for those on the lowest incomes. We very much welcome this new scheme, which helps address this issue and provides hope for those trapped in unserviceable debt.”
