Govanhill success for GLC's Payday Loan Survival Guide as relaunched with Glasgow University's Student Representative Council

Govan Law Centre's (GLC) Payday Loan Survival Guide has been redesigned and relaunched with the support of Glasgow University's Student Representative Council (GUSRC).  You can download the new GLC 'Breaking free from payday loan debt' leaflet here.

Working in partnership with GUSRC, we have also launched a separate Glasgow student version of the guide, which is available from GUSRC on Glasgow University's campus at the John McIntyre Building.

The guide has been used to help empower citizens to regain control of their finances and challenge unfair charges and interest whereever possible. Govanhill Law Centre (GhLC) solicitor, Rachel Moon, recently used the legal arguments in the guide to secure a fantastic outcome for a client in Glasgow's Govanhill.

GhLC's Rachel Moon, Solicitor

GhLC's Rachel Moon said: "Wonga currently have an advert showing the 'real life' stories of people who use Wonga, however the stories do not correspond with our experience with this pay day loan company and others.

Our client was hospitalised and off work and as a result receiving only statutory sick pay. Our client took out pay day loans as she was struggling to maintain her court agreed rent payment arrangement. These loans were continually rolled over incurring the additional fees and costs in addition to the high rates of interest. The money was taken directly from her account leaving her with little or no money to buy food and other necessities and certainly no money to pay her rent.

We made a complaint on behalf of our client to the 23 pay day loan companies who had given her credit in a matter of minutes. This was on the basis that the companies had not undertaken proper creditworthy assessments under the Consumer Credit Act 1974, as they are required to do and that the loans should be written off as a result. We argued that it should have been apparent from the assessment carried out that the loan was not suitable or affordable for our client.

Payday loans aren't cuddly or cheap

We have had some success and a number of the companies have confirmed that they will write off the debt in its entirety; other companies have advised that no further interest will be added to the outstanding amounts and would offer a settlement figure of capital alone. During this process, it was discovered that an administration fee was incurred when our client went through a broker website. When requested to do so, these have all been repaid within a number of days".

Govanhill success for GLC's Payday Loan Survival Guide as relaunched with Glasgow University's Student Representative Council

75% of Scottish Government consultation responses against 'four year bankruptcies' in Scotland

In a news statement to Money Saving Expert (MSE) yesterday, the Scottish Government suggested its proposal to make Scots pay more over a longer period in bankruptcy had support from its public consultation on the draft Bankruptcy and Debt Advice (Scotland) Bill.

A Scottish Government spokesperson told MSE: "We consulted on this proposal and the majority of stakeholders who expressed a preference preferred a longer contribution period for bankruptcy of five years".

What the Scottish Government statement singularly failed to do was explain how the majority of consultation responses to this question - 75% of all responses - believed there was no need for change at all  (para 5.64, page 54 of the Accountant in Bankruptcy's analysis of consultation responses).

The Scottish Government had originally proposed a multiple range of 'products' within bankruptcy with different conditions and criteria which was ultimately viewed as an over-complication of the remedy.

Extrapolating support for 'four year bankruptcies' from Question 10.41a when 75% of respondents were either against the proposal or in favour of the status quo would suggest the Scottish Government is not prepared to listen to its own public consultation. There is an overwhelming majority of civic Scotland against making poor people pay more.

GLC's Principal Solicitor, Mike Dailly said: "The underlying rationale of this Bill is regressive and draconian. It changes bankruptcy from a well understood last resort of debt relief, into a vehicle to extract as much money as possible from all debtors in order to pay for the administration costs of the Accountant in Bankruptcy - an agency of the Scottish Government - and to swing the pendulm in the favour of creditors regardless of the impact on vulnerable debtors. In so doing, the Bill takes us back to 1913 Scotland".

75% of Scottish Government consultation responses against 'four year bankruptcies' in Scotland

Don’t punish the poor and those in financial crisis in Scotland – Scrap clause 4

In two weeks time, the Bankruptcy and Debt Advice (Scotland) Bill will undergo its Stage 1 vote in the Scottish Parliament.  Clause 4 of the Bill would break with almost 30 years of Scots law history by requiring a debtor in bankruptcy to make payments to his creditors over four years instead of three. It also gives the Accountant in Bankruptcy – an agency of the Scottish Government – a new power to decide the level of payments in all cases by way of a ‘Debtor Contribution Order’.

Why make people in crisis pay more now?

Last year, the UK economy was in recession and our recovery this year is very slow, with Gross Domestic Product (GDP) bumping along at just over 0.5% growth. In real terms in Scotland, incomes and wages have been eroded by inflation, the cost of living has increased, fuel costs have increased by over 10% year on year, and UK austerity measures have seen a massive cut to public services and welfare benefits. Why then change Scots law to make those in financial crisis pay more and pay longer?

GLC believes clause 4 of the Scottish Government’s Bill is ill-considered and-ill advised. It presents a solution to a problem that does not exist. It has no support from the Scottish advice sector, and even most creditors do not support it. It will mean Scots have to pay longer than anyone else in the rest of the UK – and for those in financial crisis this equates to greater hardship.

Last month’s ‘Maxed out’ report examined the impact of problem debt in the UK and found that “The costs to those affected, in stress and mental disorders, relationship breakdown and hardship is immense. But so too is the cost to the nation, measured in lost employment and productivity and in an increased burden on public services”. 

Scotland’s laws on bankruptcy were designed in 1985 to provide respite and relief for citizens in financial crisis; an opportunity to get their life back on track. Why is the Scotland Government proposing to punish debtors when we ought to be helping them?  A recent Money Advice Service survey confirmed that Scotland has some of the worst ‘debt black spots’ in the UK, with 30.9% of people in Inverclyde in debt, 29% in Glasgow, 28.8% in Dundee, 27.6% in East Ayrshire and 26.9% in West Dunbartonshire.

GLC’s Principal Solicitor, Mike Dailly said: “We see no case to force all Scots in financial crisis to pay more and longer in bankruptcy, particularly at a time of austerity when families are struggling to make ends meet”.

“To compound matters the Bill would also replace the helpful ‘Low income low asset’ (LILA) expedited form of bankruptcy with a new procedure with a £10,000 debt level cap. This will exclude many Scots with no assets and push them into a four year repayment plan through ordinary bankruptcy. Alternatively it will exclude them from debt relief altogether, exposing them to ongoing debt collection, none of which makes any sense”.

“GLC believes that forcing poor and insolvent Scots to pay more and longer to access the lifeline that bankruptcy provides is a regressive and mean spirited policy than even the Grinch would shirk at. GLC hopes the Scottish Government will reconsider this departure from 30 years of Scots law history. We intend to launch a broad church campaign to scrap clause 4, so that impecunious Scots in financial crisis are not punished at a time when they need help”.

Don’t punish the poor and those in financial crisis in Scotland – Scrap clause 4

Part-time solicitor vacancy (maternity cover)

Part-Time Solicitor (0.5 FTE) sought for maternity cover.  Court and/or tribunal experience required. Experience in housing, employment, social security or other areas of social welfare law would be an advantage. 

Please send CV and covering letter to Mike Dailly at Govan Law Centre, 18-20 Orkney Street, Glasgow, G51 2BZ or m@ govanlc.com.  Closing date noon on Friday 13 December 2013. Govan Law Centre is a Scottish charity SC030193.

Part-time solicitor vacancy (maternity cover)