Bankruptcy Scotland: insolvency figures show a decrease

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Bankruptcy scotlandThe most recent data released by the Accountant in Bankruptcy (AIB) show that personal insolvencies in Scotland have reduced for the quarter to September 2013. The figures highlighted that just over 3,400 people were declared insolvent in the three month period which was down by fourteen percent against the previous three months.

The good news is that this is the third successive period showing a reduction in the insolvency figures which includes bankruptcy and whilst there are many factors that can affect this it is certainly a positive sign on what is seen as an end of the line solution for those with serious debt problems.

New legislation should help those considering bankruptcy

In addition to the improved figures there is new legislation due at the end of this year which is designed to help people with serious debt problems get better access to help and advice. The new legislation is also expected to ensure that people who can afford to pay their debts are encouraged to do so. It is envisaged that these two measures taken together should have the effect of further reducing the number of bankruptcies each year.

It would seem that there is a move away from making it easier for the debtor to declare bankruptcy and being so readily able to write off outstanding debt towards a situation where there is a better balance that shows more consideration for the interests of the creditor and what they are owed.

Increase in the number of debt management plans

Whilst bankruptcies and personal insolvencies have shown a welcome decrease in numbers there has been a significant increase in the numbers of Scots using formal debt management schemes as a debt solution. The Debt Arrangement Scheme DAS which is the government backed scheme continues to show increases in uptake and is now seen as an effective alternative to bankruptcy.

The figures highlighted that the debt arrangement scheme showed a four hundred percent increase over the previous year’s quarterly period.

Bankruptcy and debt advice

Bankruptcy is not a process that many people are familiar with and it is therefore important that anyone considering it as a debt solution should take professional debt advice to ensure they are fully aware of the facts. The forthcoming changes in legislation make this even more pertinent and the value of independent advice on bankruptcy should not be underestimated.

Bankruptcy has serious implications for people in terms of financial restrictions, the possibility of losing their home and future credit problems. There are also the issues associated with particular jobs that forbid bankrupts and the restrictions for example on being a company director.

The process of bankruptcy is there to help people by providing a formal and legal route to resolve serious debt problems but it has its downsides and these must be considered in association with the particular circumstances of each case and the personal circumstances of the individual concerned.

Information on bankruptcy can be found on the website of the Scottish Courts.

Debt advice on pay day loans

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Debt advice on pay day loansIt’s been a long time coming but at last the government is taking action on payday loans and has decided to introduce a cap on the cost of these loans. Costs and interest charges on many of these loans can be extortionate and there has been concern raised by consumer groups and debt advice organisations on the regulation of this type of loan and the debt problems they cause.

What is a pay day loan?

Payday loans are sold and marketed as a simple solution to help people pay bills and other expenses until their wages or salaries hit their bank accounts. However evidence has now shown that they are anything but simple with huge rates of interest, costs and draconian default penalty fees. Consumers using these so called short term loans can find themselves easily trapped in a cycle of debt which can quickly drag them into deeper financial problems.

Best advice on payday loans

Although it may seem a case of easier said than done, the best debt advice on payday loans is to avoid them. If you already have one try to pay it off as quickly as you can and do not take out another one. It is important to avoid the potentially dangerous cycle of taking out one payday loan to pay off another. Consider all the alternatives available to you.

Alternatives

There’s a range of alternatives available to you that you should try first:

  • Contact your local credit union who you will find through the Association of British Credit Union. They provide loans and credit options that are simpler and almost certainly cheaper.
  • Cut back on your spending. This is a simple but often overlooked course of action that can often help in the short term.
  • Think about selling any unwanted items you may have. It’s so much easier now with the help of the internet and sites such as Gumtree and eBay.
  • You may find it difficult but asking friends and family for help can provide that short term assistance that may negate the need for the loan altogether.

You may also find that a combination of the above alternatives can help resolve the problem. The key is to avoid taking out the loan at all.

Debt advice and help is available

If you are experiencing debt problems through payday loans then you should seek the best debt advice you can as soon as possible. There’s a variety of debt advice organisations who will provide immediate debt help and advice to help your problem and show you the best way to take action.

It’s important not to wait and hope that the problem will resolve itself as it generally never does. In fact the evidence is that the longer people wait the worse the problem can become.

Try to avoid incurring more debt, particularly expensive debt, in order to pay off your current debt problem as this is often a short term fix that doesn’t get to the root of the problem and can be the start of a debt cycle that leads to more serious problems.

There is also a Government guide on options for paying off your debts which you may find helpful.

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