THE number of people making themselves bankrupt in Scotland is rocketing.
When the government introduced legislation last April allowing low income, low asset (LILA) debtors to petition for their own bankruptcy, it estimated that 2000 people a year would apply. It has since revised that to 6500 in the first full year.
However, the figure had topped 7000 by the end of the third quarter.
"It now looks likely LILA cases will actually top 10,000 in their first year," says Eric Nisbet, a director of Independent Insolvency Practitioners for Scotland.
In the past, creditors have been unwilling to sequestrate such debtors, which meant they could only watch as the interest rolled up.
Allowing them to bankrupt themselves means they can in theory at least escape the debt trap.
But Nisbet says the legislation was brought in before the current recession started to bite, and could now be open to exploitation through opportunist claims.
He warns: "With LILA bankruptcies running at 200 cases a week and an average of £17,200 written off per case with average assets of £50, that equates to £3m a week been written off the Scottish economy."
Meanwhile, an opinion poll this week from YouGov found 59% of the under-35s saying they had not received enough financial education to manage their money well. The best result was 46% of the over-55s expressing a lack of confidence.
Also this week came findings from the first thoroughgoing study of whether financial education in schools actually works.
The IFS School of Finance charity, which runs the certificate and diploma in financial studies courses at A and AS-level equivalent in schools, has criticised the government's dilettante approach to sprinkling some optional money lessons in the personal and social education curriculum.
The Financial Services Authority backed this up last July with research suggesting that only formal exams in personal finance made any lasting impression on school students.
The latest study from University of Manchester tracked more than 3000 students with the formal qualifications for up to three years, and "demonstrates beyond doubt that standalone financial education qualifications can dramatically improve individuals' knowledge, skills and confidence in financial matters, and that long-lasting behavioural change can be achieved as a result", according to IFS.
It says the study suggests strongly that money education is most effective "when young people are experiencing the transition towards greater independence and adulthood - this contrasts with the approach of many who believe that early years and a focus on primary school children is appropriate".
A parent of my acquaintance agrees. His 11-year-old returned home this week with an application form, out of the blue, for a Royal Bank of Scotland bank account in his schoolbag. The Revolve account for 11-to-18 year olds comes with a Solo card "for use in shops or online", and the kids are told they can custom design the card with their own photo or artwork.
The bank explained: "School Money was launched in 2006 and forms a hands-on part of the MoneySense for Schools programme. School banks are only opened at the request of the school, and the primary focus for the schools and RBS is to ensure that pupils are experiencing the practicalities of managing their finances through both operating their own bank account and working in the bank. The MoneySense programme is accredited by the Personal Finance Education Group, and is the leading financial education programme in the UK, with over 700,000 pupils having taken part in the past year alone."
The IFS, however, says the successful exam-based approach "contrasts with the government approach of thinly spreading financial education across the curriculum in a variety of subjects".
Nick O'Reilly, president of R3, the UK insolvency trade body, helping to launch the study with all-party MPs at Westminster, said: "On a day-to-day basis, financial education is something that people would use above any other qualification."
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