Scotland's poorest and most vulnerable debtors were yesterday offered their cheapest escape from creditors.

The Scottish Government said it would allow so-called "Ninas" - people with no income and no assets - to declare themselves bankrupt for a fee of just £100.

The move is designed to rescue those who have no way out of debt but whose creditors have declined to take court action against them, and comes after a campaign by money advice charities.

Fergus Ewing, the Community Safety Minister, said: "There are people across Scotland who simply see no way out of the debt they are in. When people are earning under £220 a week and the bills and demands keep coming through the letterbox, they need a realistic low-cost way out.

"This government has listened to the views of Citizens Advice Scotland and Money Advice Scotland who say that over 1000 people across Scotland with low income and assets desperately need a new way to find relief from debt.

"That's why I will shortly be laying regulations that provide a new low-cost, government-run scheme to provide that. The low income, low asset scheme will provide a new route into bankruptcy for the minimum possible cost to the worst off in our society.

"I hope this scheme can provide relief for those who need it most and provide a last resort way out of the spiral of debt for those who can't afford it and simply have no option other than bankruptcy."

The government will introduce new regulations under last year's Bankruptcy and Diligence Act 2007 to allow the Accountant in Bankruptcy to provide the £100 service.

The announcement comes as debt charities warned of a mountain of credit card bills to hit Christmas shoppers this month. Nearly nine million people in the UK used credit to buy their presents and food this holiday season.

The people targeted in the initiative, are far from the home-owning, middle-classes who account for the vast majority of credit. But the impact of even the smallest loans or debts can be huge - especially as interest rates for Ninas are far higher than for most borrowers.

Yvonne Gallacher, chief executive of Money Advice Scotland, said: "We are pleased that government has listened to the advice sector, who have a wealth of experience in dealing with individuals in society who presently cannot access a bankruptcy route, due their status."

Kaliani Lyle, chief executive officer of Citizens Advice Scotland, said: "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."

The new "cheapie" bankruptcy will be available only to people who earn less than £220 a week, the equivalent of 40 hours on the minimum wage, and have less than £1000 in assets.



Of benefit to

  • The calls are making him ill. Mr A, 61, owes £16,000, has been in debt for three years, and the debt collectors are after him. Nobody will take him to court, so he cannot make himself bankrupt under current Scottish laws. Things went wrong for Mr A some time ago. Disabled for 10 years, he set up himself up as a bookie. His health suffered, so he shut his business down. His creditors do not want to know his problems.
  • Mr and Mrs B knows how Mr A feels. The 45-year-olds owe nearly £25,000 but have no way to pay it back. Mr B works full-time but earns just £220 a week. Mrs B looks after her four children, one of whom is severely disabled. They have no assets. They have carried the debt for three years but, like Mr A, cannot petition for bankruptcy because their creditors have not taken them to court.