Changes to the Scottish Government's debt management scheme will save people money by freezing their interest and charges earlier, it has been announced.
The Debt Arrangement Scheme (DAS) helps people pay off their debts over an extended period of time while giving them protection from creditors taking action against them.
Enterprise Minister Fergus Ewing said changes to DAS - which has recorded 3,900 cases already in 2012/13 - would freeze interest and charges earlier in the process, from when the debtor's application is submitted to their creditors, and would alter the rules on payment holidays, taking into account changes in personal circumstances.
During a debate at Holyrood, Mr Ewing said: "In practice this could protect the debtor from as much as two or three additional interest charges. That may not sound much, but it is two or three months when the debtor will be worried sick about the interest which is mounting." The minister said the changes are expected to come into force before summer recess.
DAS is one of the measures being used by the Government to help people tackle problems with debts.
A report commissioned by Consumer Focus has shown an increase in the use of so-called pay day loans, with 1.2 million adults in the UK taking out an estimated 4.1 million loans in 2009, worth £1.2 billion.
Mr Ewing said some of these loans charge interest that can accrue at a rate of up to 4000% APR. The minister also updated Parliament on plans for reforming bankruptcy legislation.
"Later this year we will bring forward a Bankruptcy Reform Bill, a financial health service," he said. "This will ensure that Scotland leads the way in development of modern insolvency practices which responds effectively to meet the rights and needs of borrowers and debtors."
Labour welcomed the changes to DAS, but urged the Government to do more with its existing powers.
The party's suggestions included the use of the Government's social advertising budget. Labour's Ken Macintosh said only £23,000 of this was spent on highlighting debt issues in 2011/12, while "cynical and predatory" loan firm Wonga had an advertising budget of £16 million in 2011.