Merry Debtmas Scotland - Sharp Increases Expected in Those Seeking Debt Help in 2014

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Many Scots expected to use payday loans & credit to pay for a Christmas they can't afford.

2013 has seen a huge rise in the use of payday loans and other forms of high interest credit, it won't come as any surprise then that there has been a 106% rise in Scottish residents seeking debt help due to spiralling interest, charges and fees from payday loan providers. These loans accounted for around 7% of debts from clients in 2011 whereas they account for around 15% today.

Debt Arrangement Scotland report a high influx of clients seeking a solution to their debts as they can no longer afford to keep up with monthly payments. Margaret Beagrie from DAS told us "The last quarter of 2013 has been very busy with calls from consumers unable to cope, the scariest thing is most people hold off until the new year to seek advice, taking on more credit to finance Christmas spending".

The government recently announced the introduction of interest and charges caps on payday loan providers which will take effect in April 2014 when the FCA (Financial Conduct Authority) takes over the duties of the Offices of Fair Trading. With rates as high as 5000% APR and system that charges daily for failure to pay, it's easy to see how this type of debt can snowball out of control.

Debt legislation in Scotland has recently changed in order to help both creditors and debtors with a focus on cutting interest and charges and reducing monthly payments so that problem debts can be paid back over a longer period of time. The new legislation focuses on steering debtors towards the Scottish Debt Arrangement Scheme (DAS) with the government trying to increase awareness of the solution through TV and radio ad campaigns.

The DAS has seen over £13 million repaid to creditors in the 3rd quarter of 2013 with Enterprise Minister Mr Fergus Ewing hailing the scheme as a success. The main benefit to the DAS is that home owners and anyone with valuable assets are not made to sell these in order to satisfy creditors, instead the debtor will contribute a monthly affordable amount without added interest until the balance has been satisfied.

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Paul Gillooly
Debt Arrangement Scotland
+44 1412800565
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Paul Gillooly
since: 04/2013
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