For those who have fallen on hard times there is no doubt that the physical and mental pressure can have a major impact upon your life. However, there are many agencies out there that will assist you in tackling your debt problems and indeed for those who are suffering from stress there is nothing wrong with going to see your doctor.

Until you are clear in your mind it will be difficult to find a solution and to see any light at the end of the tunnel but the reality is that help is at hand.

Burying your head in the sand

The worst thing you can do if you are struggling financially is to bury your head in the sand and hope that everything will go away in due course. The only thing that will happen, guaranteed, is that your financial situation will get worse and worse and then when you finally do decide to do something about it then it may well be too late. This is the natural instinct of anybody suffering undue stress or undue pressure but it is one that you need to avert with regards to financial issues.

Control your spending

When you consider that just a saving of £10 a day will amount to around £300 each and every month there really is scope to reduce your spending, no a matter what you are spending your money on. We can all find ways to cut back on our expenditure in the short-term, we can all tighten our belts a little and we can all learn to live within our means. However, before you can even consider controlling your spending you need to know exactly where your funds are going and how much is being spent every month.

Luxuries may need to go out of the window

The thing about modern day life is that items such as Sky TV, broadband, multiple mobile phones, etc are seen as must have luxuries when in reality they are not. The truth is that there are many items which we use on a daily basis that we could survive without and indeed there are many phone contracts we could renegotiate at a much lower level. There is nothing wrong in tightening your belt in the short to medium term to reduce the financial pressure because ultimately if you don’t then it will get worse.

Enjoy your life again

The worst you can do with regards to financial stress and financial hardship is to keep on spending at a rate that is out of control. We all have friends, family members and partners we would like to help but sometimes we need to say no without even having to explain ourselves. There are many of us who have a soft heart and are more than willing to give friends and family our last pound - but why?

For many of us if we turn the tables with our friends and family members would they be as forthcoming in our situation as we have been? Would they really be at your beck and call and give you their last pound?

Conclusion

The vast majority of people who struggle with debt in Scotland, and indeed anywhere around the world, are more than happy to bury their head in the sand and assume that everything will turn out right. The truth is that if you are in financial trouble the chances are it will get very much worse before it gets better and indeed you may need to act sooner rather than later. Cutting out luxuries and expenditure which is not critical can give you some breathing space in the short to medium term but for many of us we may need to look down the route of trust deeds, bankruptcy, arrangements with creditors and other such options available.

There is nothing wrong in tackling your financial problems but there is something wrong in burying your head in the sand and hoping it all comes right.

Fewer people in debt

The energy companies have confirmed that the number of customers owing money to their gas and electricity firms has fallen over the last few months and indeed there are hopes this trend will continue. The government has been very active in this particular field although historically it has been very difficult to try to tie down energy companies to “acceptable rises”. It is unclear exactly how the number of people in debt to the energy company has fallen because the economy is still struggling, employment is still difficult to obtain and recent changes in the tax system could see many families thousands of pounds worse off each year.

Fewer people in debt but amount owed grows

In a rather bizarre turnaround, despite the fact there are fewer people in debt to their energy companies the amount owed by customers in debt has increased. This would seem to suggest that those who have not addressed their energy problems are burying their heads in the sand and hoping it will all come right in the end. The truth is that if you continue to spend funds which are not readily available as when required then these debts can very quickly become all-consuming.

While the energy companies will revel in the fact that fewer people are in debt in relation to their electricity and gas bills the fact that the existing debts have gone up is a worry.

Ways to combat utility debts

There are a number of very subtle ways in which you can at least offset and reduce any potential financial problems with regards to your gas and electricity supplies. These are often very simple but they can take away just a little bit of pressure which can make your life just a little bit more bearable.

Direct debits

In this day and age, bearing in mind the economic turmoil, it is very easy to spend money which is readily available and to hand. Therefore more and more people are looking towards paying utility bills by direct debit which can in some cases actually reduce their bills. If you time your direct debits just a few days after payday then very often you will not even realise the money is gone.

If you also continue to pay the same direct debit going forward then there is every chance that at some point in the year you will be in credit with your utility providers. There is then the possibility of withdrawing any significant credits to help to pay for example Christmas or summer holidays. Each utility company will have different criteria with regards to credit withdrawals so it is worth checking these out before you count your cash.

Pay-as-you-go electricity and gas

More and more homes in Scotland now have pay-as-you-go electricity and gas supplies which on one hand are very useful because you only spend what you can afford but on the other very often the energy supply is more expensive because of this method. It seems utterly bizarre that those who are potentially in the worst financial situation are very often charged the higher rate for their gas and electric despite the fact that the utility companies continue to announce profits in the billions of pounds a year.

Extra insulation

It seems very strange and very easy to suggest extra insulation as a means of cutting down on your energy bills but even turning down your thermostat by 1° will have an impact over the year. A lot of local authorities in Scotland will offer some form of financial assistance to those who are looking to introduce extra insulation to their homes. If you are in such a situation where this is available then you should take them up on it because in the long term it will save you money. Those living in council homes will also benefit from such schemes although you need to put your name forward to ensure this.

Planning ahead

In the current economic climate it is vital that you plan ahead with regards to your finances because ultimately every penny counts. It seems that the cost of living continues to rise month on month while income is under pressure and taxes continue to head north. The government has also brought in a number of changes with regards to working tax credits which could potentially impact some families in Scotland by anything up to £4000 a year. This has attracted significant disgust from unions and those representing the lower paid in our community although the government appears unwilling to make any concessions at this moment in time.

Times are really hard

It is very easy to suggest ways in which you can save money on your gas and electric but the truth is that more and more people are struggling to survive. The economic climate is very difficult to say the least and while employment positions are sometimes difficult to find there are opportunities out there. The Internet is one such opportunity which few people realise the potential of but it could literally change your life overnight.

Conclusion

While the number of people owing money to their gas and electric companies has fallen it is strange to see that the amount actually owed has increased. This will do nothing to reduce the criticism which has been aimed at the U.K.’s utility companies with prices continuing to move higher while the rest of the UK suffers. Various UK governments have attempted to limit price rises although the very fact that the industry seems to be sticking together gives it more power over the government.

If you are in serious trouble with regards to your gas and electric then you need to ask for help as soon as possible. There is no point in letting the problems build up to a situation which is unmanageable because ultimately this will put more pressure on your life and your finances.

One of the most common health issues with regards to debts and financial problems is an inability to sleep otherwise known as insomnia. The vast majority of us will hopefully sleep in excess of seven good hours a night although those with insomnia issues may be lucky to get even two hours quality sleep. Even if you have a disrupted sleep pattern you will at times of the day feel bright and alert but underneath your capacity to function is being compromised.

Relationship issues

They often say that pride comes before a fall and many people who take up trust deeds in Scotland or even move towards bankruptcy will often discuss relationship issues after the event. It is true what they say about pride comes before a fall because very often despite the fact that we need assistance with our finances many people will take upon themselves the whole burden. This can mean working excessive hours, a lack of sleep, a lack of intimacy in your relationship and ultimately pushing away those who you care most for.

There are many marriages which end in failure because of debt issues, there are many relationships which are never quite the same because of financial worries when in reality if you were to address these problems as soon as possible the impact upon our personal life would be severely reduced.

Excessive drinking

Excessive drinking and excessive socialising are probably the last things that you should be doing if you have financial problems but many people find solace in the bottom of the glass. Those few hours away from the home and those few hours away from your financial pressure are a godsend to many people but the problem is that when you wake up the next morning they are still there and excessive spending will make them worse.

We also need to take into account not only the physical but also the mental impact which excessive alcohol will have on your life and your health. You will be irritable, you will suffer from sleep issues, you will not be focused and for some people alcohol will become a crutch which they find difficult to let go of.

Anger and aggression

Anger and aggression are very often associated with financial problems because in reality our body and mind can only take so much pressure and so much stress. At some point they will need to be some form of release valve and many people resort to aggression and anger towards their nearest and dearest. This will lead to arguments in the home, relationship problems, financial issues made worse and ultimately shame and guilt. The more shame and guilt you feel less chance of asking for assistance which literally makes a terrible situation many times worse.

Depression

Depression is a medical condition which very few people will manage to avoid for the whole of their lives. It may revolve around personal issues, work issues although for many people it is financial problems which will bring on this dilapidating condition. Depression is an illness which can literally sneak up on you over a matter of weeks and months although thankfully it is a condition which is treatable. If you take a step back and look at your financial situation you will have a better chance of resolving this issue and tackling auxiliary issues. Depression is, as we suggested, a treatable illness and once it is under control your mind will be more focused and your body will feel healthier.

In years gone by there was something of a stigma attached to depression and other “mental illnesses” but those days are long gone and it is now a much researched and a much talked about issue. Without meaning to sound too harsh, it is those who fail to gain treatment for their depression that have the most to lose and with so many services now available there is no need to suffer in silence.

High blood pressure

High blood pressure is another issue which many people will suffer during their period of financial distress and debt issues. Again, there are readily available treatments for high blood pressure because unless treated it can lead to other side-effects and potentially life-threatening conditions. There are so many ways in which our body can take stress but there are so many ways in which our body is impacted by stress. We all know when we are pressured, we all know when we are uptight and we all know when we are down but how many of us will visit a doctor sooner rather than later?

Conclusion

There is a very strong link between debt and mental health problems and the sooner that we understand these links the better for all effected. It is all good and well playing the strong character who can sort out their own finances while in the background your body is taking a pounding and your mind is taking a beating. The after affects of stress and pressure on your body can last for many years if left untreated and indeed for many people they can lead to a life changing scenario.

The reality is that before you are able to address your financial situation you need to admit that you are suffering both mentally and physically. The fitter and stronger you are the more chance of challenging your financial situation and the more chance of beating it. There is no stigma attached to mental health issues because in reality those who avoid them for the whole of their lives are very few and far between. Putting your hand up and asking for help is braver than sitting back and letting your life dissolve around you.

Government grants

The UK government and the Scottish government are both very keen to get as many people into employment as possible and as a consequence there are a number of grants available for apprenticeship positions. These are there for the long term training of employees and are strictly regulated to reduce abuse of the system. Historically there have been various companies around the UK who have taken on trainees under this system and then literally thrown them onto the scrapheap when government assistance comes to an end.

If you have a position vacant and you are looking for somebody to assist you in your small business then perhaps it is worth taking a look at the grants available and the financial assistance on offer.

Tax rebates

Over the last few years a number of small businesses across the UK have benefited from various tax rebates and council tax incentives. This ensures that more businesses are given financial assistance at the start of their long journey to profit thereby giving them more chance of being successful. There are many things to consider when working for yourself including direct taxes, indirect taxes and even national insurance payments. Any financial assistance which can be given in the short to medium term is for many people a godsend.

Business loans

There are many small businesses which can be set up overnight and literally hit the ground running but there are also other businesses which depend upon equipment and properties which are often expensive. The current climate in the UK does not encourage banks to lend money to small businesses where there is a significant degree of risk of failure in the first two or three years. Therefore the authorities have put together a band of business loans which can be applied for by anybody across the UK using specific circumstances and criteria. Do you qualify for such assistance?

Business advice

There is no doubt that those who believe that they “know everything about business” are the ones who are most likely to fail because of their inability to accept help. The reality of working for yourself is that you cannot be an expert in every element of business and you cannot be an expert in every element of everyday business life. Have you ever seen anybody who is perfect with accounts and also has a telephone manner which is perfect for talking to customers? Have you seen anybody who can write the best article in the world and can also design the best website?

The reality is that if assistance is required there are a number of business ventures around the UK specifically in place to offer help and practical advice. These are often manned by people who have been there, done it and have the T-shirt thereby they are able to pass on vital and valuable information from their very own experiences. Whatever difficulties you are having setting up your business there is no doubt that others will have had these problems before you and others will have these problems after you. Speaking to somebody who has been there and done it will let you know that you are not suffering alone and you are not stupid!

Business angels

Some people may suggest that the era of entrepreneurship in the UK has long gone and investors are less willing to take a risk on a potential blockbusting venture. However, the reality is that there are many groups of business angels around the UK ready and available to offer advice and funding for business ideas which would normally be frowned upon as too high risk. If you were to read the press you would probably think that such funding was not available but it most certainly is and there is actually an excess of cash waiting to be invested. If you have an idea, if you have a solution to a common problem or you believe you have the next Facebook then why not chance your arm?

Growth, growth, growth

There are many successful small businesses in and around Scotland and many of these have been ongoing for some time now. The ones which have moved from a successful small business to a successful large business are the ones which continue to grow, grow, grow on a regular basis. There is nothing wrong in sitting back having created a business which brings insufficient income to fund your lifestyle but if you are looking to make serious money then you need to have a plan of attack for the future. You need to know your market, you need to know your customers and you need to know your limitations – have an end goal in mind.

Conclusion

The opportunity to set up and run your own business has never been more available to the masses than it is today. The Internet has literally brought customers to just a key click away from your products and from earning some cash. However, while many people would welcome the opportunity to work for themselves and to be their own boss there is still scepticism and confusion.

Thankfully the UK government and the Scottish government are very proactive in the area of Scottish small businesses offering practical advice and cold hard cash. There is also an array of business angels up and down Scotland willing to take a chance on opportunities which may well have been rejected by the banks as high risk. It will be interesting to see how the current crop of small businesses perform bearing in mind the economic downturn and the difficulties facing many people in the UK. Has government assistance been enough?

Holidays on a trust deed

There are a number of factors to take into consideration if you’re looking to go on holiday with a trust deed because while the cost of everyday living is well accounted for in the trust deed small print there are some issues which may need the assistance of your trustees.

Who is paying for the holiday?

This will obviously be one of the first questions because ultimately if you are able to pay for an expensive holiday then the trustees may deem that your financial situation has changed. If your financial situation has changed for the better then they may well ask you to contribute a one-off payment or else increase your regular payments. That is assuming that you are up-to-date with your agreed trust deed payments.

If however a friend of the family or family member has offered you a holiday which they are willing to pay for then in reality there is very little that your trustees could complain about. Indeed a few days away from the hustle and bustle of everyday life may well work out better for you and leave you refreshed and ready for the challenges ahead.

How much is your break costing?

If you’re paying for a holiday yourself we could be talking about anything from a couple of hundred pounds to a few thousand pounds. As a consequence the cost of your holiday, assuming that you are paying for it yourself, is something which needs to be considered and there is no harm in letting your trustees know that you are going on holiday and you will not be around for a while. They may ask for details of your holiday, who is paying, how much it will cost and where you are going to - make sure you are truthful with them!

Living a normal life under a trust deed

While this subtitle may seem a little surreal to many people, suggesting that you can live a normal life under a trust deed, the reality is that a trust deed is not the end of the world. You will not have to account for every penny that you spend, your payments will not change unless your financial situation changes and your trustees are not out to take you for everything they can. You will have the chance to discuss your repayment plan with your trustees because ultimately if you can afford to pay off part of your debt then you will be asked to do so.

Many people will find that once finance payments have been taken out of their monthly budget their financial situation will ease significantly even taking into account payments to your trust deed repayment plan. The very fact that you are being forced to go down this particular debt management route would suggest that there was a major financial issue which was possibly dragging you down. The longer you let such situations fester and build the worse they will become and the greater the toll they will have on your health and your private life. There is no shame in asking for help to reorganise and refinance your debts and there are more than enough services out there to ensure that assistance is very easily to hand.

Debt and mental health issues

There have been a number of surveys and investigations over the years with regards to the relationship between debt and mental health issues. The reality is that the more pressure on your mind the more likely you are to struggle both from a health and mental point of view. Some people may think they can learn to live with stress and pressure but the reality is that your body will remain under massive stress for long periods of time which will eventually take their toll.

Many people who have been forced to look down the trust deed or bankruptcy routes have commented upon the massive relief they have felt once their finances have been reorganised. It is very often only when you are out of the high-pressure situation that you realise the impact it was having on your life. You can learn to sleep again, you can learn to relax again, you can look to the future and every phone call and every knock on the door will not be met with dread.

Can debt situations really sneak up on us?

There are many people who have fallen into serious financial distress who suggest that there situation did literally sneak up on them and they never quite realised how bad they were. While there are some people who experience short sharp shocks in this particular area there are many who ignore a build-up of financial pressure over months or years in the hope that it will go away. If we are honest, the vast majority of us know when our financial situation is worsening but many of us fear the unknown and continue our lives as normal.

It is only when your financial situation reaches a point from which there is no return that we all look back and think “why didn’t we do something” when in reality we could have. There is no point burying your head in the sand, there is no point looking for that magic bullet, there is no point assuming everything will come good in the end because you have to fight the fight yourself. It may well be a difficult and emotional rollercoaster sorting out your finances but at the end of the day you are taking control of your life and your finances again.

Debt management in Scotland

It is becoming more and more apparent that debt problems in Scotland, and indeed other parts of the UK, are getting worse. More businesses are failing, more jobs are being lost, more credit card balances are growing and more and more people are drowning in a sea of debt. It is therefore imperative that those who are experiencing financial hardship take advice at the first opportunity to try and resolve their situations.

Too many people are simply sitting back and automatically assuming that the situation will rectify itself in the short to medium term. However, the economy the in UK is under pressure, the subject of Scottish independence is not helping commercial investment and taxes are set to rise as governments look to improve their finances. Unfortunately, it is the poor consumer who is at the bottom of the pile and struggling to survive.

Trust deeds in Scotland

In years gone by there was a stigma attached to bankruptcy and the debt management services which would have an impact upon your credit rating but would ultimately allow you to rectify your financial situation. This stigma is now something of the past and trust deeds, bankruptcy and other debt management arrangements in Scotland are now more commonplace than ever before. It is imperative that you get out of your mind the fact that it is not a perfect scenario, it is not your chosen route but ultimately unless you take action you will be living under the cloud of debt for many years to come.

There are an army of professional financial advisers out there who can offer information on trust deeds and debt management. They will walk you through the fairly straightforward procedures step-by-step advising you of the pros and cons of such arrangements. They are fairly straightforward in structure in that all of your debts, assuming your creditors agree, are frozen and placed under the control of your trustees. You will then instigate some form of repayment program depending upon your financial position and over a three-year period agree to pay back so much per month.

After the three-year period is over your trust deed will usually end and you will be released with no debts to your name. However, this is not the green light to go and spend, spend, spend because your credit rating will have suffered, you will have limited access to additional funds and your trustees will be overlooking your situation to see that all is well. If they were to become aware of funds which you had held back or assets which you had “forgotten” to list then they can come back to reassess your situation.

Honesty is the best policy

If you are honest with the trustees of your trust deed then there is every chance that you will after three years be released from any obligations. You would be free to live a life without debt, you will not have the bailiff knocking at your door and you can literally start again. If during your trust deed there is a significant positive or negative change in your finances you must make the trustees aware as soon as possible. Failure to do so is illegal and the potential penalties could well undo all of the good work and progress you have made with regards to sorting out your finances. Honesty really is the best policy!

Life after a trust deed

While the three-year length of the traditional trust deed may sound like a life sentence for many people it will go by fairly quickly. Let’s not forget that prior to entering your trust deed you would likely have experienced bailiff communications on a daily basis, problems with your bank, problems with your credit card provider and problems funding your day-to-day existence. If you compare this with a life where your trust deed effectively shields you from creditors and bailiffs and leaves you debt free after three years, which position would you rather be in?

There is no doubt that even in the aftermath of a successful trust deed arrangement you will have problems accessing additional finance and credit. However, if you take a step back and think of the situation, why would you want to “tick yourself up” again and get yourself back into the same situation?

A new start and a new beginning

If you look at a trust deed, or indeed any other debt management arrangements available in Scotland, as a new start and a new beginning for yourself and your family then the potential rewards are endless. Whether or not your financial situation deteriorated because of actions you took or actions outside of your control does not matter one iota. The truth is that once your debt has been written off and you have been released from your trust deed you can look forward to a new life without the grey cloud of debt hanging over you.

Conclusion

There are many people in Scotland who should be considering a trust deed but who are perhaps too proud or misinformed to do so. The stigma of years gone by has disappeared and it is those who are not addressing their financial situations that have most to lose. It is all good and well being proud and independent but many people are now so heavily in debt that it is literally affecting their day-to-day existence. What kind of life is this?

So the general consensus is that if you are feeling financial strain then look at your finances, look at your budget and look at your income. If you cannot see a way forward with regards to reductions in expenditure or an increase in your income then you may need to take professional financial advice. Pride comes before a fall – don’t forget that!

Credit card debt continues to grow

Credit card debt is perhaps the most dangerous form of debt in the UK and is the one which is having the most impact on consumers. It is too easy to spend, spend, spend and at the end of the month payoff but a fraction of your balance to keep everybody happy. Slowly but surely your long-term credit card debt will rise and eventually you would be unable to afford the minimum payment and further penalties and interest charges will be added. This is when credit card debt becomes a major problem!

Tackling credit card debt

The first thing you need to do when you feel that your finances are running out of control and your credit card balance is unmanageable is to sit down and look at your overall situation. Take a piece of paper and write down your assets, your income, your expenditure and your debts. You will very quickly see your financial situation taking shape and you will either be surprised, okay with the situation or devastated. However, there is no hiding away from the fact that if you have problems paying back your minimum payments per month then you need to act now!

Consolidation loans

If you have a number of debts which are crippling your financial situation you may need to take professional financial advice about a potential consolidation loan. This will effectively consolidate all your debts into one manageable loan which may need to be taken out over a prolonged period. The interest rate charged on your loan will reflect your individual situation although in many cases it is unlikely that you’ll pay anywhere near the level of interest you would have been paying on your credit card.

Consolidation loans will probably leave you with significant debt on a long-term basis but the fact that you will be able to pay down the debt at the end of the day is paramount. You may not have as much money to spend as you would have liked but hopefully you will be able to resurrect your credit score and get yourself back on an even keel.

Cheaper credit

While it would be wrong to suggest taking on more debt if you are already struggling it may well make sense to re-evaluate the mix of your credit. Personal loans are very often the cheapest form of credit available followed by overdrafts and then credit cards and store cards. Therefore if you have significant high interest debt on your credit card and for example you have the potential to increase your overdraft or a personal loan, at a lower interest rate, this will reduce your interest payments in an instant.

Many people who have large credit card balances are paying hundreds if not thousands of pounds in additional interest which they really do not have to pay. There are options and ways to alleviate the excruciatingly high credit card interest rates and while these will not in one blow cure your financial problems they will reduce the pressure. When you’re looking at your debts you must also look at the interest rate, fees and penalties which you are being charged because whatever you can trim from your ongoing repayments will allow you to hopefully consolidate your financial position into a better state of affairs.

Trust deed

The trust deed in Scotland option is one which more and more people are now looking to consider along with their professional financial advisers. If your finances are in a state and it becomes clear that you will not be able to keep up with your repayments then you need to look at alternative options. A trust deed would effectively allow your debts to be frozen with no further penalties and no further interest charges. It would also offer you protection from your creditors and would avoid the constant contact from debt collectors who are used by many of the U.K.’s largest financial institutions.

You would need to go to court to obtain a trust deed through a professional financial adviser and a very strict and legally binding repayment agreement would be put in place. The traditional trust deed would last three years and after this period all of the debts within your trust deed would be written off and you effectively start again.

Bankruptcy

Unfortunately for more and more people in Scotland, and indeed across the UK, bankruptcy has become a real option when looking to reposition and refocus your finances. While it will be wrong to suggest that bankruptcy is the “easy option” for many people in the current financial climate it is the only option. If you are struggling to repay your debts and indeed to cover your cost of living expenses then you need to try and draw a line under the situation. Taking professional financial advice is the first step which you should take and even after the first meeting you should begin to feel better in yourself.

Again, bankruptcy is not the easy option and should not be considered without due thought and consideration but it may well allow you to draw a line under your financial situation and attempt to move on. You may well be locked out of credit arrangements for a number of years into the future but in reality it does give you the chance to start again and at least try to put your finances on a sounder footing.

Conclusion

If your financial situation has taken a turn for the worst and you are unable to keep up your repayments as well as covering your cost of living expenses then you need to take professional advice. There are a number of options open especially for those who have struggled with high interest credit card debt and see no way out. There are options, there are mechanisms in place and you do not need to live a life with massive debts hanging over you.

Scottish consumers taking on more debt

A report last year suggested that during the first half of 2011 over 500,000 Scots took on further debt via credit cards, loans or overdraft facilities. These are people who were struggling to pay off their initial debts and were forced to take out further financial arrangements to see them through this difficult time. While many will be crossing their fingers and hoping that the economy recovers, in the short term this would appear to be something of a forlorn hope and with the subject of Scottish independence muddying the water yet further the financial situation in Scotland could get very much worse before it gets better.

Scottish consumers struggling to reach payday

A further report by the Scottish citizens advice bureau in 2011 suggested that 43% of consumers in Scotland were struggling to make it from payday to payday. This 43% figure equates to over 1.7 million people and is a massive blow to the Scottish government which has made great strides over the last few years in relation to debt management plans and debt refinancing operations. However, it seems that more and more people in Scotland are happy to take on further debt in the short term and bury their head in the sand rather than attacking the problems head-on.

Young Scots under financial pressure

It is a shocking statistic to learn that four out of five Scots under 21 are in debt and around 33% of them have debts of over £5000. Even in the economic boom times this would be something of a millstone around the neck of young adults in Scotland but in these economic downtimes it could literally see many of them drowning in a sea of debt. When you also take into account we are now experiencing record numbers of young adults out of work, with yet more of them having been forced to take on debt, this is a time bomb waiting to explode.

Again, as we have mentioned on numerous occasions, there is a need to introduce financial management into the educational curriculum and to ensure that those leaving school, college and university are fully aware of their possible obligations across the financial landscape. Many young adults seem to be taking on debt as a means of getting by from month-to-month and many are living a life they cannot afford. So who do you blame?

Should credit card companies be allowed to target young adults?

In years gone by there would have been very few people leaving school, college and university over the age of 18 who would not have had some kind of introductory offer in relation to a credit card, loan or overdraft. The truth is that young adults are the kingpin of the UK financial system because they are the customers of tomorrow and they are much sought after by UK banking institutions. However, it is not those who can pay back their debt on time and in an orderly manner that are most lucrative, it is those who need to extend their finances, incur interest, incur penalties and are effectively tied to their bank sometimes for the rest of their lives.

There are many in the financial world who will disagree with this widely held opinion but the truth is that your bank will make less money off you if you pay back your credit card debt/loan arrangements on time. They make most money off those who fall behind with their payments and who incur additional charges.

Who is to blame for the explosion in consumer debt?

The financial problems in the UK, including England, Scotland, Wales and Ireland, are not the fault of any one entity. True, the financial industry may well have overextended credit to those who were perhaps borderline, consumers have for many years now lived with their plastic friends and overextended their finances and successive governments have fed the economic boom by massaging interest rates to suit their own ends.

We all need to take some blame for the ongoing increase in consumer debt but in reality taxpayers up and down the UK have paid in cold hard cash to bail out banks which have lent money in a sometimes irresponsible fashion. However, it is very galling for many people to see UK taxpayers paying the price while the UK banking sector continues to announce large profits and very large bonuses for those in the higher echelons of the industry. In some quarters this is seen as rubbing the nose of taxpayers in the problems of the past.

Conclusion

It is very distressing to see the figures associated with Scottish consumers and their ever increasing debt pile. Average debt across Scottish consumers is higher than the UK average and the truth is that, with the economy still struggling, this situation is likely to get worse before it gets better. There are also those who have highlighted the Scottish independence issue which is, in the minds of some, causing something of a backlog of investment in Scotland until the situation is resolved. As the Scottish government does not intend to hold a referendum until 2014 can Scottish consumers and Scottish businesses really afford to wait that long?

The Scottish citizens advice bureau is a very interesting barometer with regards to financial concerns and financial problems across Scotland. If these figures are a true reflection of the current situation then it will take some people many years to pay off their debts and many more will fall into financial hardship and be forced to take out trust deeds or perhaps look down the bankruptcy route. However, in many ways it is those who are burying their heads in the sand that will suffer most because when finally they pull their heads out of the sand and look up, the situation may well be out of their control.

Outstanding credit card debt in Scotland

It seems that those with relatively high incomes, in excess of £30,000 per annum, are more likely to have outstanding debts on their credit cards. Bizarrely it seems as though those with money need to spend more money and those with incomes under £10,000 per annum will most likely owe nothing on credit cards or store cards. The very fact that those on higher incomes seem to be spending more and more money on their credit cards is a definite worry because these are often the type of employment positions which are hit hardest during the downturn.

While it would be wrong to suggest that all of those households across Scotland on relatively high incomes have increased their credit card balances of late, on the downside there appears little appetite to pay down credit card debt. As we have seen on so many different occasions, many people automatically feel that the economic downturn will suddenly turn around and all will be well.

If only this were the truth!

Do we need educating on our debt management?

It seems rather bizarre that we educate our children in history, geography, maths, cookery skills, physical education and other elements which are not always commonplace in everyday life but we do not educate them on financial management and debt management. Many children are therefore leaving school in this economic downturn without any idea of the cost of living, the cost of general items and how they will be able to afford to live away from their parent’s homes.

Many experts such as Martin Lewis have come to the fore to criticise successive UK governments on their apparent inability to introduce education of a financial nature into the school curriculum. It is an absolute scandal that we let people leave school with knowledge of areas of education which they will never use in their normal life. Yet, we seem happy to let them leave school and then bombard them with credit card arrangements, loan deals and overdrafts without fully explaining how these figures are calculated and how long they will take to pay off. Yes, the financial companies will argue that all of the figures are there in the small print but in reality how many young adults leaving school will fully understand these?

Educating your children

It seems rather bizarre that families up and down the UK will seemingly need to educate their own children with regards to the cost of living and the financial cost of overspending. We all have a duty of care towards our siblings, friends and family members to ensure that they are fully aware of any arrangements which they are signing up to.

PPI was just the latest in a long line of financial scandals which have hit the UK and seen the financial industry pay out billions of pounds in compensation. These are perfect examples of how the vast majority of us carry on regardless and are not fully aware of what we are signing up to. The truth is that many people already had payment protection insurance and were effectively sold the same service for a second time. While the situation is beginning to unravel and payments of compensation have been released to consumers this is a situation which should never have happened in the first place. When you sign up for a loan, overdraft or some form of credit arrangement are you fully aware of any arrangements which your finance company may have with other financial operations?

Do you really need a credit card?

The subject of credit cards is one which is causing major concern and many arguments in homes up and down the UK. It is very easy to obtain a credit card and spend just a couple of hundred pounds which you intend to pay off over a relatively short period of time. However, once you begin to spend on your credit card and perhaps you look towards the rewards available in the shape of bonus points this can very often quickly move out of control. Just a few hundred pounds can soon become £500 which can soon become £1000 which can soon see you struggling to pay your minimum monthly contribution.

Once you begin to struggle to pay off your minimum payments on a monthly basis, interest and potential penalties will begin to add up. The truth is that if you are not able to pay off your credit card this will very quickly turn from cheap finance, which you had hoped to pay off on zero interest each and every month, to the most expensive finance available on the market.

What are the options if you have significant credit card debt?

There are many options for those with credit card debt which include consolidation loans, a transfer to a 0% interest offer or perhaps an arrangement such as a trust deed or some form of debt management agreement. The truth is that if you are having problems paying off your credit card debt you should review your situation as soon as possible and ensure that you are doing everything you can to reduce the financial pressure.

Financial pressure can lead to physical pressure which can lead to mental pressure which can change your whole life. Many people will automatically assume that we are being over pessimistic but those who have fallen behind in their financial repayments will very much recognise how it can very quickly impact upon other areas of your life. Marriages can fall apart, homes can be lost, cars can be repossessed and very suddenly your life is out of control.

However, there is help out there and are options even for the worst case scenarios. Do not suffer in silence, do not try to pay back money which you cannot afford by building up more debt for the future and do not bury your head in the sand. Look up, review your finances, consider the options and then make a decision about what you want to do after taking professional financial advice.

Would you lose your car?

In order to fully appreciate what a trust deed is and what it can do for you we need to take a step back and have a look at the situation from the outside. You have debts you can’t repay, you have living expenses and you need to address the situation sooner rather than later for a long-term solution. There is no point in trustees taking away every asset that you have including your car if for example this is required to transport your family or to get to and from work.

In simple terms, your trust deed trustees are unlikely to take away every day assets such as your car, your home and other similar assets. They may well ask you to remortgage your home to release any significant equity but with regards to a car, why would they take this from you?

If you can’t earn you can’t repay any of your debt

If you need your car for work or family business there is no sense in your trustees making you sell the asset to realise what would normally be a pittance against your outstanding debts. If you did not have a car for transportation then you would need to pay for public transport which will be a further expense thereby making a difficult situation more expensive.

There will be certain assets which the trustees will investigate and potentially ask you to liquidate to help pay off your creditors but everyday items are unlikely to be touched. Even in the event that a trustee requires you to sell a specific asset they need to put this before the courts and there is no guarantee they would obtain the relevant ruling. The rules and regulations in regards to trust deeds have been tightened over the last few years and to all intents and purposes it is the chance to start again although it is not always the easy option.

Do not hide your assets from your trustees

There may be a temptation in some circumstances to hide some of your assets or some of your funds from your trust deed trustees. However, we strongly recommend being totally honest and upfront with regards your trustees to ensure that after the three-year period has expired you can literally start again. If you are not upfront and honest with your trustees they can retrospectively reclaim assets and funds which they feel you have “hidden”.

So how would you feel if after three years of paying back as much as possible to your creditors you then receive a letter through the post confirming your trustees have found additional funds or assets which you did not disclose? You would have struggled for three years, you would have looked towards the three-year expiry and the chance to start again but unfortunately you have potentially ruined everything.

You are allowed to have a life

Sometimes the wrong impression is given with regards to debt management issues such as trust deeds because while you will need to repay as much as possible to your creditors this figure will only apply after your everyday living expenses have been deducted. Even then, it is not in the interests of the trustees to take every penny you have because ultimately the whole idea of the agreement is to get you back on your feet and earning money again.

So, within reason, you will be allowed to socialise, you will be allowed breaks if you can afford them and while luxuries will be something of the past until your trust deed has expired, this does not mean that you can’t live a life. Can you imagine your mental and your physical state if every penny was taken from you after deducting living expenses? What use would you be to anybody if there was literally nothing left after your trust deed was over?

It is very easy to assume the worst when you are in significant financial distress and you are looking for the easiest option and the quickest way out. However, as we have mentioned on numerous occasions, it is imperative that you talk to your trustees with regards to your trust deed agreement and run any questions you have by them. They are there to help you, they are there to assist you and whether you believe it or not, they are not on the side of your creditors.

Can I take out a second trust deed?

The chances of obtaining a second trust deed are relatively slim because your initial trust deed was issued on the proviso that you were able to draw a line under your debt and begin life again. It does not look good in front of the courts if you are there again applying for a second trust deed and effectively showing that you are unable to control your assets and your spending yet again.

Whether or not there are circumstances which would allow a second trust deed is debatable but the very fact that a trust deed arrangement is a debt management arrangement to get you back on your feet should never be forgotten. Creditors will literally have written off the vast majority of your debt and to ask them to do this for a second time would be very difficult to justify.

Conclusion

It is very easy to think that trust deed trustees will take everything from you but in reality what benefit would this be to you, your creditors and your trustees? The whole idea of a trust deed is to let you get back on your feet, draw a line under your financial troubles and allow you to support yourself going forward. The less money you are able to earn the more benefits you will have to claim from the authorities and the more this will cost the taxpayer.

A trust deed, assuming that you stick by the agreement, is an opportunity to draw a line under a very difficult period in your life and move on.