Consulates and Embassies will help out the destitute, as they have done in your case but, as you say, any funds provided have to be paid back. I am assuming that the American Embassy cancelled your passport and will only issue a new one when you have refunded the money owing.

do you happen to know the exact procedure with regards to the UK? I was told that the Home Office will seize the passport upon arrival at say London Heathrow, and you will be issued onward train ticket from there?