Scotland’s debt crisis: Hundreds of people pushed to the brink every day as average debt tops £15,000

Scotland’s debt crisis: Hundreds of people pushed to the brink every day as average debt tops £15,000
November 8, 2016
Scottish Trust Deed

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A DAILY RECORD investigation has discovered that hundreds of Scots are drowning in a sea of debt every day, many going without food or fuel to pay off a terrifying level of arrears.

A SHOCKING number of Scots have been pushed to the brink of financial meltdown by a debt epidemic that’s spreading across the country, we can reveal today.
An investigation by the Daily Record has found people are “drowning in debt” to such an extent that nearly 400 Scots a day are seeking help from the country’s biggest advice service.

That’s eight busloads of people who contact Citizens Advice Scotland and their local Citizens Advice Bureaux each day because of financial difficulties – and on average they owe a whopping £15,000 each.
Almost half of them say their debts are so bad they’ve gone without food or fuel to try to pay them off.
Many had taken out payday loans at extortionate interest rates and soon found themselves out of their depth and facing aggressive money collectors.

The national average salary in Scotland is £20,800 before tax and national insurance, which means some people in full-time jobs will owe more than their annual take-home pay.
And with the recession biting deeper, debt is engulfing people who never before thought they would struggle to make ends meet.

Credit card bills and payday loans are causing the bulk of the misery, our investigation found.
CAS say 118,244 Scots sought their help last year after racking up debts they couldn’t afford.
And, apart from the high average debt of £15,000, the other big worry is the number of young people who owe huge amounts before they reach 21.

CAS chief executive Margaret Lynch told the Record too many Scots are “drowning in debt”.
She said: “The worrying thing is not just the numbers of people in debt, but the extent of the debts they are facing.
“Our evidence shows that across Scotland, debt levels increased by 50 per cent over the period of the recession.
“The number of young people in debt is particularly worrying.
“Four out of five young Scots have been in debt by the age of 21, and a third have owed more than £5000.
“More than 40 per cent of Citizens Advice debt clients have told us they have gone without food or fuel in order to try to pay off their debts – in many cases because they were being pursued aggressively by their creditors.”

Meanwhile, Money Advice Scotland predicted the debt epidemic will only get worse.
Yvonne MacDermid, the charity’s chief executive, said: “We have been predicting a triple-dip recession for some time … and the added burden and worry of a lot of people is welfare reform and what is round the corner.
“People are obviously struggling on a day-to-day basis, even if they are in work, and a lot of people have been made redundant.
“It is getting harder and harder and I’m not surprised that the number of people seeking help is escalating and the average debt is going up.”
Lynch said it’s important that people realise that good and free help is available from their local Citizens Advice Bureau, adding: “Anyone who is struggling with debt can get free, confidential and impartial advice from our money advice teams.
“The sooner you seek advice, the better.
“We understand that it’s very tempting to stick your head in the sand and ignore those envelopes as they come through the door. But it doesn’t work, unfortunately.
“It just piles up more and more debt, which you will have to face eventually.
“It’s far better to confront it now, and we’ll help you do that.”
Lynch said CAB staff see people every day who took out a loan without working out how they were going to pay it back and are now so deep in debt they can’t get out of it.
She added: “Their credit rating has been ruined, their day-to-day finances are even worse than they were to begin with, they are getting aggressive letters and phone calls from the lender, and their health and relationships are being affected too.
“The best decision you could make this year would be to give that misery a miss.”

There are mounting concerns that people struggling to make ends meet are turning to payday loan companies for help – something which often ends up making matters worse.
The controversial high-cost credit industry has quadrupled in size during the recession and is now worth £3.5billion a year.

More than half of countries in the European Union, and 35 out of 50 American states, already have laws in place limiting how much lenders can charge. But there are no restrictions in the UK, where interest rates as high as 400 per cent are standard.

Half of borrowers who take out payday loans are unable to repay them and one third of customers say they have been hassled by debt collectors in the past year.
Lynch said: “These loans are very well advertised and are designed to appeal directly to those who are struggling to make ends meet.

“Yet their interest rates are often extremely high and many of the clients we see, feel the terms were not presented accurately or clearly enough. So we would urge everyone who is tempted by any form of loan offer to stop and think carefully before signing anything.

“We understand that the slick, friendly TV adverts are very appealing. But there is no such thing as free money – you will have to repay it, with interest. In some cases, a lot of interest.”
She added: “Payday loans are easy and convenient. But a lifetime of heavy debt is not.”
Enterprise Minister Fergus Ewing pledged last night to make more help and advice available to Scots crippled by debt.
And he urged people struggling with debt to seek out help from the Scottish Government’s debt arrangement scheme (DAS).

The free initiative aims to help people with multiple debts by freezing interest, fees and charges on debts and giving them more time to pay without the threat of court action.
Ewing said: “It is my job to ensure that everyone has access to the appropriate solutions for their debt concerns.”

If this article has effected you or someone you know we can offer free debt help in Scotland using a Scottish Protected Trust Deed to stop creditors contacting you and taking legal action. A Scottish Protected Trust Deed can write off up to 75% of your debt.

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