Author: Craig Stocks

A new report has revealed that six in ten Scots are worried about being able to afford their household bills as a result of the cost-of-living crisis. Two thirds of people in Scotland have cut back on non-essential spending, with two million having to cut back on everyday essentials such as food and heating. Citizens Advice Scotland has said that more people required food banks referrals in January 2023 than ever before. Millions of food parcels were handed out last year, with almost half going to children. The cost-of-living crisis has plunged 70% of Scottish households into fuel poverty and debt, but help is available for the millions who are struggling.  

Energy Crisis

The Office for National Statistics has revealed that, in the last 12 months, gas prices have increased by an average of 129%, taking the average household energy and gas bills to over £200 a month. A further 20% rise in energy bills is expected in April this year. Demand for support with energy bills has overtaken the number of people seeking help with universal credit for the first time ever and is three times higher than it was before the COVID-19 pandemic. A household is described as being in fuel poverty when 10% or more of their income is spent on heating and other energy bills. Many people are falling behind on payments to their energy suppliers due to the high costs, causing them to fall into debt.  

Debt

A third of people in Scotland started 2023 in debt. Advice Direct Scotland, have revealed that 17% have fallen behind with repayments in the last few months, with the most common forms of debt being energy bill arrears, council tax arrears, and credit cards. A quarter of those owing money are in over £10,000 worth of debt. However, the cost-of-living crisis has caused a third of households to turn to credit cards and loans to keep up with everyday costs. A rise in debts means a rise in required repayment amounts and this cycle is pushing struggling households further into their debt. 2.3 million households in Scotland missed at least one of their January payments and over half have not yet sought any form of help. The stigma surrounding debt is affecting those who need help. People who have never found themselves in debt before are now struggling to keep up with the amounts that they owe.  

Mortgages

Mortgage interest rates are a heavily discussed topic at the moment. Average interest rates are expected to rise to between four and five percent, and those with fixed term contracts set to expire in the next 12 months will be expected to keep up with the rising costs. 47% of people with mortgages are worried about affording their monthly payments. This figure rises to 55% amongst those who rent. Higher taxes and inflation are the root cause for higher interest rates, which means that the costs are set to continue rising. Reports have found that many people who are afraid of falling behind on mortgage payments are falling into debt to avoid losing their homes.  

Self-employment

The national minimum wage has been increased in an attempt to aid low-income households during the crisis. However, those who are self-employed do not benefit from this and not everyone has the same ability to increase their charge rates. The cut back on non-essential spending has also seen many self-employed individuals lose business and fall into financial difficulties. The lack of job security for both zero-hours workers and those who are self-employed is adding to the debt problem millions in Scotland are facing. The drop in income has also affected individuals’ ability to pay their income tax.  

Vulnerable Groups

More than 60,000 disabled adults have fallen into debt, which has forced many to live without essential care and support. Social care is free to adults in Scotland over the age of 65, but for those under that age, the costs are adding up. Costs are at the discretion of local councils, and some offer free care for all ages if other criteria are met. The average cost in Scotland is £832 a week for nursing care and £719 a week for residential care. Councils have taken an increased amount of action on those who have fallen behind with the rising costs of their social care.  

Worried about household bills and struggling with debt – What to do?

If you are worried about your household bills and you are struggling with debt – Help is available. Our doors are always open at Trust Deed Scotland^® where we offer tailored debt advice and support. By using our Trust Deed Wizard tool, you can get in contact with us and we can help formulate a decisive plan to reduce your debts. Our advisers can change people’s lives for the better. We can advise on several effective solutions such as a Trust Deed, the Debt Arrangement Scheme and Minimal Asset Process sequestration which can reduce and eventually stop harassment from the people you owe money to and help put you back in control of your financial situation. We believe that with the right advice, people in debt can regain command of their finances, and feel empowered about their options, rather than fearing about enforcement agents and other debt collection practices. If you require support, then please do not hesitate in contacting a member of our experienced debt advice team today.

The cost-of-living crisis is set to plunge 460,000 people in Scotland into debt. A further 644,000 people are predicted to be pushed further into their existing debts. For International Worker’s Day, we want to recognise the millions of people who are overworking to stay afloat financially. Across the UK, over four million people are considering taking on a second job to combat the cost-of-living crisis. Despite this, 88% of working people in the UK have experienced a burnout in the last two years and 27% said that working longer hours makes them feel depressed. No employer in the UK can legally ask you to work more than 48 hours a week. However, those on low incomes may be struggling to afford basic living costs. Therefore, may be looking for additional employment to plug the gap in their finances. Here at Trust Deed Scotland®, we are seeing more people than ever who have been forced to turn to credit to fund everyday essentials. We calculated that those on minimum wage are likely to be in a deficit each month after basic household funds were deducted.  

Debt Help in Scotland

If you are struggling with unaffordable debt, debt help is available in Scotland. Here at Trust Deed Scotland®, we specialise in formal Scottish debt solutions designed to reduce your overall monthly payments and get you back in control. Our experienced advisers give debt advice tailored to you that can allow you to make an informed decision on whether a formal debt solution is right for you.  

A Trust Deed

A Trust Deed is a voluntary but legally binding agreement between you and the people you owe money to, where you agree to make an affordable payment each month. This allows you to make payments towards your debts, typically over four years, and once your Trust Deed is completed the remainder of the debt is legally written off. Once your Trust Deed has been approved, your creditor contact will reduce, and they can no longer take any court action against you to collect the debt. All interest and charges to your debts will also be frozen. In January 2023, borrowers in the UK paid £156 million pounds in interest a day. To qualify for a Trust Deed, you must be living in Scotland and have debts above £5,000.  

The Debt Arrangement Scheme

The Debt Arrangement Scheme (DAS) allows you to repay your debt at a manageable level for you, also freezing all interest and fees. To qualify you can have any amount of debt but must not be in any other formal debt solution. Like a Trust Deed, the DAS is also legally binding and the people you owe money to are not able to contact you or take any court action against you. Payment breaks of up to six months due to unemployment or illness are also available while you are in a Debt Payment Programme (DPP). The DAS will last until the debt is cleared but it will protect assets such as your home and cars.  

Facing Redundancy

There were 90,000 redundancies in the last three months in the UK. It can be difficult to secure another position quickly and many people may be left unemployed for extended periods of time and relying on benefits. For those struggling to adjust to their reduced income or struggling with unaffordable debt, either the Minimal Asset Process (MAP), or a Statutory Moratorium may be the best solution. Minimal Asset Process is a route into Sequestration, which is the Scottish form of bankruptcy. The Minimal Asset Process allows you to write off your unsecured debts in a short period of time if you are on a low income with no disposable income left after covering your essential living costs or your income is only from income dependent benefits. A Statutory Moratorium effectively stops creditor action against you for 6 months, offering you valuable time to seek advice and think about your longer-term options. It is not a debt solution, it doesn’t write off debt and does not stop interest and charges from building up, but it does give you time to think and will stop imminent creditor action, such as a wage arrestment or a bankruptcy petition. Regardless of your previous situation, you are not alone. In Scotland, there were 21 people a day who registered as insolvent or bankrupt between October and December 2022. Here at Trust Deed Scotland^®, we will never judge you. All advice is completely confidential and seeking advice does not oblige you to follow through with a debt solution.

The cost of living crisis is set to plunge over 460,000 people in Scotland into debt for the first time. To add to this, a third of UK adults have said that they are struggling to afford their rent or mortgage payments. 46% of Scots have cut back on their non-essential spending in an attempt to combat the crisis. The cost of living crisis does not seem to have an end date in sight and millions are left with an adapted life. By reducing the amount of money that they would previously spend on activities that bring them joy, many may begin to see a negative impact on their mental wellbeing. We’ve compiled a list of free or inexpensive activities designed to keep your mind healthy without breaking the bank.    

Exercise for mental wellbeing

Something that is proven to improve a persons’ mental wellbeing is exercise. There are ways to avoid a heavy gym membership fee.

1. Yoga

Yoga can improve flexibility, strength, energy, and overall health. The slower movements and breathing exercises increase blood flow and can be a great low-impact form of exercise.  

2. Youtube & Tiktok

The internet is filled with millions of exercise videos to follow. We recommend picking an instructor and sticking with them and their recommended program. Often, they will update a daily playlist with a compilation of videos so that you have a fresh workout routine every day. TikTok is a great place to find exercise ideas as well as other help and advice. For example, Trust Deed Scotland^® are now on TikTok and we provide debt advice and further information on the solutions that we offer.  

3. Classpass

If you live in either Edinburgh or Glasgow, Classpass is a subscription service which gives you access to hundreds of individual studios for single classes. They offer a one month free trial which can be used at any of their studios. This would allow you one month of instructor-led classes in a variety of different areas. It’s worth noting that, while in your free trial, you can only redeem a class at each studio once, but there are plenty to choose from. There is a subscription fee if you decide to continue on with your membership.  

4. Outdoors

There are the obvious free activities that we have to mention. You could go for a walk, a run, a hill climb, dancing in your living room, or cycling. If you’re looking for more information about free outdoor activities to get involved in, we recommend visiting Visit Scotland and Nature.scot.  

Activities

For anyone not looking for some exercise motivation, there are many free or cheap activities to keep your mind busy or get the family out for a day without pushing you further into financial struggle.

1. Visit a free attraction

There may be some added costs here such as transport. But there are many free attractions to visit in Scotland. These Include:

• The Kelpies, located in Helix Park
• Glasgow’s Riverside Museum
• Highland Folk Museum
• St Magnus Cathedral
• Calanais Standing Stones

 

2. Create your own board game

It’s super easy to create. All you’ll need is some paper and some coloured pens or pencils. This is a great way to entertain both kind and adults. After you’ve created your game, you can spend some time trying out each persons creation.  

3. Virtual zoo and aquarium visits

Since the COVID-19 pandemic closed attractions across the country, many aquariums and zoos have introduced cameras that stream footage from inside the enclosures or tanks. You can sit down with your family and enjoy watching the animals.  

4. Fondant sculptures

Fondant is most commonly used in the decoration process of cakes. It’s relatively cheap to buy and can be a great crafty activity to take part in. You can purchase a few different colours and see if you can create an animal or perhaps even a car.  

5. Reading aloud with your loved ones

For a more low-key activity, you can take turns reading a book aloud to your loved ones. This can be a great way to enjoy time together, as well as engaging you all in a new story.    

Mental Health resource links

For some people living in Scotland, the impact of the cost of living crisis may trigger compulsive thoughts and unhelpful behaviours, particularly if you have pre-existing conditions such as an anxiety disorder or Obsessive Compulsive Disorder. If you are receiving support for your condition, you might find it helpful to talk to your clinician, therapist, or other medical professionals. There are also an increasing number of online resources available for you. Anxiety UK: Help for mental health and other forms of anxiety. Beat Eating Disorders: Help and support for those suffering with Eating Disorders GamStop: Free online self-exclusion from gambling apps and websites in the UK. OCD-UK: Tips and support for people living with OCD. Rehab Recovery – Addictions helpline. SAMH – Providing support and additional help for people in Scotland with poor mental health. It’s important for our mental wellbeing that we continue to keep our minds active as there is a well-established link between debt and mental health.

• Half of Scots are worried about the impact the cost of living crisis will have on their mental health.
• Research shows that 50% of adults struggling with debt, also struggle with their mental health.

  Debt is not only an issue for people already living with a mental health problem. Research studies indicate that debt can actually be both a consequence and catalyst of mental health problems, including:

• Anxiety and Stress
• Depression
• Self-Harm & Suicidal Thoughts
• Strain on Personal Relationships, Social Inclusion and Self-Esteem.

   

Accessing debt help in Scotland

For those struggling with debt, there are a number of solutions and ways to access financial help in Scotland. Many people are worried about the people they owe money to contacting them to chase payments and can have a detrimental effect on an individual’s mental health. Trust Deed: A Trust Deed is a legally binding agreement between you and your creditors where you agree to pay back an affordable portion of what you owe, whilst protecting assets such as your house and car. There is usually a fixed time rate of four years and on completion of this term, all remaining debt will be written off. While in a Trust Deed, creditors can no longer contact you and cannot pursue you for the remaining balance that will be written off. To qualify, you must have an income and the amount of debt must be more than £5,000.   The Debt Arrangement Scheme: The Debt Arrangement Scheme (DAS) allows you to repay your debt at a manageable level for you, freezing all interest and fees. To qualify you can have any amount of debt but must not be in any other form of debt repayment. A DAS is also legally binding and the people you owe money to are not able to contact you or take action against you. Payment breaks of up to six months due to unemployment or illness are also available while in the scheme. The DAS will last until the debt is cleared but it will protect assets such as your home and cars. The debt advice team at Trust Deed Scotland^® can also give you the advantages and disadvantages of both solutions plus alternative formal Scottish debt solutions available for Scottish residents. Call us on 0141 221 0999 for more information.

The price of food has increased at its fastest rate in 45 years and is one of the main contributors to the cost of living crisis in Scotland. The annual inflation rate for this category alone was 19.2%. Despite this, inflation has actually reduced in the last few months. As a result, more than over one million adults in Scotland have taken action to reduce their outgoings, admitting to spending less on essentials such as food.  

Food Poverty

Food poverty refers to not having access to sufficient food, or food of an adequate quality to meet a person’s basic needs. The UK’s rate of food poverty is among the worst in Europe. The Trussell Trust saw record numbers of people seeking help between April 2022 and March 2023, with more than 760,000 people forced to turn to the charity’s food banks for the first time in their lives. Key workers are far more likely to experience food poverty. Around one in five teachers, and one in four NHS workers are currently experiencing food poverty.  

Poverty’s Impact on Health

The cost of living crisis and the rising costs that have accompanied it can have a negative impact on a person’s health, both mentally and physically.   There are several ways in which rising costs can affect health, such as: – being unable to afford food or have a nutritious diet – living in a cold or damp home – an increase in unaffordable debt – financial worries may lead to a decline in mental health   What can be done to minimise health impact: – checking eligibility to benefits that may boost income – debt relief through a variety of debt solutions – flexible work to reduce childcare or transportation costs – reduce spending in non-essential areas that are unlikely to impact a person’s mental or physical health    

School Meal Debt

A health and wellbeing census published by the Scottish government in March found that nearly 60% of pupils at least sometimes went to bed or school hungry. For children living in food poverty, a free school meal may be the only guaranteed hot food that they have that day. A growing and forgotten debt is school meal debt. This is where parents or guardians have fallen behind with paying for their children’s school meals. Aberlour, a Scottish children’s charity, has revealed that over one million pounds of school meal debt is owed in Scotland, and one in four children continue to live in poverty. As a result, Glasgow City Council has decided to scrap school meal debt above a certain amount, with further councils expected to follow. Their aim is for this to help families who are struggling with the cost of living. To add to this, school lunches are currently free for children P1-P5, but the Scottish Government are planning to extend this to all primary children.    

Scottish Debt Solutions

There are a number of formal Scottish debt solutions designed to lift the burden of debt. A Trust Deed: A Trust Deed is a voluntary but legally binding agreement between you and your creditors where you agree to pay back an affordable portion of what you owe. After your Trust Deed has ended, which is typically after four years, the remainder of the debt is legally written off. The Debt Arrangement Scheme (DAS): The DAS is designed to help you pay back your debt at a regular, manageable rate – without the threat of legal action hanging over you. The Debt Arrangement Scheme freezes interest, fees, and charges from the date of approval. As long as you fully complete the plan, then these interest and charges cannot be added back by your creditors. Sequestration: Sequestration is the Scottish version of bankruptcy. Sequestration is a way for individuals in Scotland to get rid of their debts, however, if you have any assets, they could be sold to raise money for your creditors. Minimal Asset Process (MAP): Minimal Asset Process (MAP), is a route into Sequestration. The Minimal Asset Process allows you to write off your unsecured debts in a short period of time if you are on a low income with no disposable income left after covering your essential living costs or your income is only from income-dependent benefits. Statutory Moratorium: Whilst not a long-term ‘solution’ as such this effectively stops creditor action against you for 6 months, offering you valuable time to seek advice and think about your longer-term options. As the Statutory Moratorium is not a debt solution in the sense that it does not write off debt, or stop interest and charges from building up, it does give you time to think and will stop imminent creditor action, such as an earnings arrestment or a bankruptcy petition. Any debt recovery actions already in existence, e.g. an earnings arrestment, will remain in place. To get in contact for tailored debt advice, follow our Trust Deed Scotland^® wizard tool or call us on 0141 221 0999.