Category: Unsecured Loans
25% Of Scots Wait 3 Years Before Seeking Debt Help
Christians Against Poverty Scotland have released a new report that shows that 25% of the people that they helped in Scotland waited between one and two years before seeking help with their debts, and a further 25% waited three years or more before seeking help. Worryingly, 45% said that they did not know where to get help.
CAP Scotland is a national charity that works with 715 affiliate churches, looking to help the vulnerable people out of poverty, UK-wide.
As a leading Scottish debt advice company, having helped thousands of people with their unaffordable debt, Trust Deed Scotland® have received over [reviews] reviews on Trustpilot where many people tell us things like “I wish I got help sooner” or “I can sleep again at night, now that my debt is under control again.” The fear of being judged, or feeling ashamed or embarrassed about having debts are often spoken about by our clients in regards to reasons why they put off seeking debt help. In April 2021, Lauren said: “After being hesitant for a while to contact Trust Deed Scotland, I am so glad I did, as Pamela was so friendly, understanding and non-judgemental during the process. I would 100% recommend anyone struggling with financial difficulties to get in touch. I wish I had sooner.” Also speaking in April 2021, Louise said: “Called Trust Deed Scotland eventually after months of worrying about mounting debt and just wish I’d have done it sooner. Soreena dealt with my case and couldn’t have asked for anyone better than her. She listened and totally understood everything I said and never judged me at all. I can now look forward to receiving my wages every month, knowing that everything is going to be paid in one payment and might even have some left now.” Earlier in the year, in January 2021, Jamie said: “I couldn’t have been made to feel more comfortable, I was always quite ashamed to talk about my debt. Vicky made me feel completely at ease and made the whole process seem so simple.”
- 12% Didn’t wait to seek help.
- 27% Waited less than one year.
- 25% Waited 1-2 years.
- 25% Waited 3 years or more.
- 11% Unknown
As a leading Scottish debt advice company, having helped thousands of people with their unaffordable debt, Trust Deed Scotland® have received over [reviews] reviews on Trustpilot where many people tell us things like “I wish I got help sooner” or “I can sleep again at night, now that my debt is under control again.” The fear of being judged, or feeling ashamed or embarrassed about having debts are often spoken about by our clients in regards to reasons why they put off seeking debt help. In April 2021, Lauren said: “After being hesitant for a while to contact Trust Deed Scotland, I am so glad I did, as Pamela was so friendly, understanding and non-judgemental during the process. I would 100% recommend anyone struggling with financial difficulties to get in touch. I wish I had sooner.” Also speaking in April 2021, Louise said: “Called Trust Deed Scotland eventually after months of worrying about mounting debt and just wish I’d have done it sooner. Soreena dealt with my case and couldn’t have asked for anyone better than her. She listened and totally understood everything I said and never judged me at all. I can now look forward to receiving my wages every month, knowing that everything is going to be paid in one payment and might even have some left now.” Earlier in the year, in January 2021, Jamie said: “I couldn’t have been made to feel more comfortable, I was always quite ashamed to talk about my debt. Vicky made me feel completely at ease and made the whole process seem so simple.”
Help with unaffordable debt in Scotland
If you live in Scotland and you are struggling with your finances, you can find out more about your options by calling Trust Deed Scotland® on 0141 221 0999. Alternatively, you can also download our Scottish debt solutions guide. Our experienced team can give you confidential advice, that with help you understand the pros and cons of all formal debt solutions in Scotland such as Trust Deeds, the Debt Arrangement Scheme and other Scottish Debt Solutions. Once we know more about your situation, we are then able to give you tailored debt advice that fits your individual requirements.New Scottish Loan Shark Victim Support Service Launched
The Scottish Illegal Money Lending Unit (SIMLU) has launched a new support service for Scottish loan shark victims, struggling to deal with loan shark debts reports both the Daily Record and Herald newspapers.
The unit’s new website – stopillegallending.co.uk – has been set up to provide dedicated advice and support.
Trust Deed Scotland recently reported on a clampdown by Manchester City Council on payday loan providers opening in-store locations in their city, with the English local authority fearing that many more people are turning to high cost, short term lending solutions to deal with their problem debt.
On average, loans that are taken out from illegal lenders end up costing three times as much as a regular, unsecured loan the UK regulators have previously said.
As the country continues to recover from economic and financial uncertainty following successive lockdowns and restrictions, many people have been forced into taking out loans with payday loan providers, with many more borrowing with credit cards and bank overdrafts to pay for essential living expenses, from food and basic living expenses to even paying off their council tax arrears.
More worryingly, a growing number have turned to illegal loan sharks in Scotland as a last resort.
Scottish loan sharks have been taking advantage of the pandemic, and have been known to adopt illegal methods of debt collection, including violence, theft and in the most extreme cases, forcing borrowers into prostitution and drug dealing.
With recent cuts to Universal Credit also expected to cause extended stress to households already struggling with debt, people across Scotland could find themselves borrowing from loan sharks. Indeed, The Guardian earlier this year reported that as well as traditional tactics at the community level, loan sharks are said to targeting new loan shark victims via social media platforms including WhatsApp and Facebook.
As well as supporting victims of Scottish Loan Sharks, the group aim to help more residents in communities throughout Scotland report illegal loan shark activity safely and:
- Immediate support with any urgent issues
- Longer term support to assist you in moving away from using loan sharks
- Help to access local services, including debt advice services, credit unions, addiction counselling and local support groups.
Stop Loan Sharks Scotland Charter Mark
The new recipients of the Stop Loan Sharks Scotland charter mark, a scheme initially launched last Christmas to crack down on scams, are social enterprise Scotcash and charity Grampian Regional Equality Council (GREC) in recognition of their commitment to supporting and promoting the work of the SIMLU and for taking a zero-tolerance stance on illegal money lending within their communities. Speaking on the launch of the new service, Fiona Richardson of Trading Standards Scotland commented: “I am delighted that Scotcash and Grampian Regional Equality Council have signed up to the Stop Loan Sharks Charter Mark. We have been working with Scotcash over a number of years to tackle the problem of illegal money lending and we have been working with GREC over the past year on a prevention project. By signing up to the Charter Mark, both organisations confirm their ongoing commitment to work with us on this problem. We will work together to promote the message that you should not use loan sharks, but also to make sure that, where somebody has ended up using an illegal money lender, they know where to go to receive the appropriate help and assistance. In a period of great financial uncertainty, it is important that we take all the steps we can to stop people from borrowing from loan sharks and getting trapped in a cycle of debt and intimidation.” While payment breaks may have ended for more, lenders are still obliged to offer tailored support to those struggling with their debt. Where an individual is struggling with unaffordable debt, help is available from a number of Scottish debt charities and organisations such as Trust Deed Scotland, who can offer tailored debt advice given by an experienced debt advice team. As a leading debt solutions provider in Scotland, we have already helped [volume] people in Scotland, and have also gained [reviews] Trustpilot reviews in the process. We’re suitably placed to give you tailored debt advice, and by speaking to us, you’ll have a better understanding of the options available to you.Considering borrowing money to repay debt?
If you are struggling with debt and considering borrowing money from any other source of lending, firstly consider your own affordability and whether you will be able to repay the money you are borrowing. This doesn’t just apply to loans, but other forms of borrowing such as credit cards and buy now pay later agreements. If you feel that you have unaffordable debts and cannot manage to repay the debt, don’t borrow. Borrowing money to repay debt, via an illegal loan shark, or a high-cost lending source such as a payday loan is never a good idea, but especially when you are unable to continue the repayment of these finances. Never pay a non-priority bill (e.g. credit card debt, payday loan) in favour of a priority bill (e.g. mortgage, rent, council tax) Seek help immediately. You can get free and impartial help with money, set up by the government: MoneyHelper, an independent service set up to help people manage their money. Or, you can call Trust Deed Scotland today on 0141 221 0999 for confidential, non-judgemental debt advice.36% Of Scots With Hidden Credit Card Debts
A survey has shown that over 36% of the adult population has a hidden credit card debt.
OVER 2 MILLION1 MONEY S£CR£TS KEPT FROM LOVED ONES IN SCOTLAND
Research released by the Money and Pensions Service as part of Talk Money Week 2020 shows that 37% of people in Scotland have kept secrets from loved ones about credit cards, loans and savings
• 37% of people in Scotland admit to keeping financial products secret
• People most likely to keep money secrets from their partner
• In the UK, millennials (25-34 year-olds) are the most secretive generation with three in five (59%) hiding money products
Adults in Scotland have kept over 2 million2 financial products secret from their loved ones, according to a new study of people’s financial behaviours from the Money and Pensions Service (MaPS) to mark Talk Money Week.
Of those who have kept financial products a secret in Scotland, the most common were hidden credit cards (36%). Despite Covid-19 having a widespread impact on people’s finances, the stigma surrounding talking about money in our culture remains – 36% of people in Scotland stay silent about money worries, with some of the reasons they give including embarrassment or fear of being judged.
The research, which surveyed over 5,200 people across the UK, has been launched to mark the start of Talk Money Week (9-13 November), a public awareness campaign run by MaPS to improve financial wellbeing by encouraging people to open up about their finances, from pocket money through to pensions.
UK millennials proved to be the most secretive generation, with 59% disclosing they have secret financial products, compared to just 25% of retirees. Of 25-34-year-olds who’d kept a product secret across the UK, credit cards, personal loans and overdrafts were most commonly hidden (by 40%, 31% and 23% respectively).
The Talk Money Week study also revealed that across the UK people in relationships tend to underestimate the extent of money secrets their partner keeps from them. While 23% of people in relationships suspect their spouse has kept a money secret, hidden products were found to be even more common, with nearly half of those in relationships (45%) admitting to having an undisclosed money product.
Some respondents told the researchers about secrets that became easier to manage once they opened up to their partners: one respondent claimed, “I was once close to bankruptcy due to credit cards and loans which I did not reveal to my partner until it couldn’t be hidden any longer. I admitted the issues eventually and we sorted it.”
Another respondent said:
“I didn’t tell my husband when I lost control of our credit card debt and ended up juggling cards and minimum payments. Eventually, I admitted it to him and actually acknowledged the amount of debt I now had – he supported me to get onto a Debt Payment Plan which I have been paying for just over a year now, and we are far more financially stable.
We made a choice as a couple to no longer use credit. We also now have a joint account as our main account and only our agreed personal budget for minor expenses which is transferred out to our personal accounts.”
Allison Barnes, Scotland Manager for the Money and Pensions Service said:
“With over 2 million people in Scotland admitting they keep money secrets from loved ones, we are encouraging everyone across Scotland to open up and talk about any money worries you may have during Talk Money Week this week.
“However, we understand there could be a number of reasons why people keep money secrets from those closest to them; a secret savings account could act as a buffer for those who want to escape a difficult relationship or an unpaid bill could be kept under wraps in order to protect anxious family members.
For many who keep money secrets, it can be a feeling of shame or embarrassment that debts have spiralled out of control.
36% of people in Scotland claim to have money worries and initiating a conversation with someone – a friend, family member or expert – can be a first step to start to mitigate and address the problem. Opening up is a valuable start to making problems more manageable, for the benefit of our health, relationships and overall wellbeing.
There’s no better time to start talking than today and the Talk Money Week website offers guidance to help start conversations and prepare yourself ahead of these. You are not alone and as our research shows in Scotland there are many others hiding secrets about money; there are resources available to help tackle some of these secrets including debt advice, as well as money and pensions guidance.
Jasmine Birtles, TV money expert and Talk Money Week supporter, said:
“Talking about money is still off-limits for a lot of people in the UK. Although we’re happy to talk about all sorts of subjects that used to be off-limits, if you ask someone about their income or investments they clam up. Talking about money really does seem to be the last taboo, despite it being something which is on everyone’s mind. In fact, it’s especially helpful to talk about it now, given the impact the pandemic has had on many people’s finances.
It’s particularly important when times are uncertain to talk about money with those closest to us, so we can work together towards a common goal and support each other’s progress. If that’s not an option, you can turn to organisations like the Money and Pensions Service, who have trained specialists who give free, non-judgemental and impartial guidance.”
MaPS has a wide range of resources to help people improve their financial wellbeing, starting with a conversation, during Talk Money Week and beyond.
Guides to talking about money
For guidance on kick-starting conversations about money, see the Money Advice Service’s guides:
• Read their guide on Talking to your partner about money
• Download their guide on how to talk about money.
Take action to work through your money worries
Money Navigator is a simple tool which helps people navigate their finances in the wake of Covid-19 to find a way forward, get money support now and help avoid future debt problems.
Getting expert support
To speak to an impartial expert for free guidance about your money and pensions, visit the following websites and helplines.
Money Advice Service 0800 138 7777
Pensions Advisory Service 0800 011 3797
Pension Wise 0800 138 3944
Contact Trust Deed Scotland on 0141 221 0999 for tailored Scottish debt help.
If your partner is controlling your money or running up debts in your name, you can find further resources and support on the Money Advice Service website.
The research was conducted by Opinium for the Money and Pensions Service. A nationally representative survey of 5,225 UK adults aged 18+ was conducted from 9th – 19th October 2020, of which 440 were from Scotland. The data has been weighted to a nationally representative profile.
1. There are over 5,463,300 million people over 18 (the age you can apply for credit) in Scotland (ONS). The research found that 37% admit to keeping a financial product a secret from family and friends, equating to 2,021,421 people.
2. There are over 5,463,300 million people over 18 (the age you can apply for credit) in Scotland (ONS). The research found that 37% admit to keeping a financial product a secret from family and friends, equating to 2,021,421 products.
Hidden Credit Card Debts
Across the UK, 40% of people said they had secret financial products, with the most common products being:- Hidden credit cards (36%)
- Undisclosed personal loans (23%)
- Secret savings accounts (21%)
UK millennials proved to be the most secretive generation, with 59% disclosing they have secret financial products, compared to just 25% of retirees. Of 25-34-year-olds who’d kept a product secret across the UK, credit cards, personal loans and overdrafts were most commonly hidden (by 40%, 31% and 23% respectively).
The Talk Money Week study also revealed that across the UK people in relationships tend to underestimate the extent of money secrets their partner keeps from them. While 23% of people in relationships suspect their spouse has kept a money secret, hidden products were found to be even more common, with nearly half of those in relationships (45%) admitting to having an undisclosed money product.
Some respondents told the researchers about secrets that became easier to manage once they opened up to their partners: one respondent claimed, “I was once close to bankruptcy due to credit cards and loans which I did not reveal to my partner until it couldn’t be hidden any longer. I admitted the issues eventually and we sorted it.”
Another respondent said:
“I didn’t tell my husband when I lost control of our credit card debt and ended up juggling cards and minimum payments. Eventually, I admitted it to him and actually acknowledged the amount of debt I now had – he supported me to get onto a Debt Payment Plan which I have been paying for just over a year now, and we are far more financially stable.
We made a choice as a couple to no longer use credit. We also now have a joint account as our main account and only our agreed personal budget for minor expenses which is transferred out to our personal accounts.”
Allison Barnes, Scotland Manager for the Money and Pensions Service said:
“With over 2 million people in Scotland admitting they keep money secrets from loved ones, we are encouraging everyone across Scotland to open up and talk about any money worries you may have during Talk Money Week this week.
“However, we understand there could be a number of reasons why people keep money secrets from those closest to them; a secret savings account could act as a buffer for those who want to escape a difficult relationship or an unpaid bill could be kept under wraps in order to protect anxious family members.
For many who keep money secrets, it can be a feeling of shame or embarrassment that debts have spiralled out of control.
36% of people in Scotland claim to have money worries and initiating a conversation with someone – a friend, family member or expert – can be a first step to start to mitigate and address the problem. Opening up is a valuable start to making problems more manageable, for the benefit of our health, relationships and overall wellbeing.
There’s no better time to start talking than today and the Talk Money Week website offers guidance to help start conversations and prepare yourself ahead of these. You are not alone and as our research shows in Scotland there are many others hiding secrets about money; there are resources available to help tackle some of these secrets including debt advice, as well as money and pensions guidance.
Jasmine Birtles, TV money expert and Talk Money Week supporter, said:
“Talking about money is still off-limits for a lot of people in the UK. Although we’re happy to talk about all sorts of subjects that used to be off-limits, if you ask someone about their income or investments they clam up. Talking about money really does seem to be the last taboo, despite it being something which is on everyone’s mind. In fact, it’s especially helpful to talk about it now, given the impact the pandemic has had on many people’s finances.
It’s particularly important when times are uncertain to talk about money with those closest to us, so we can work together towards a common goal and support each other’s progress. If that’s not an option, you can turn to organisations like the Money and Pensions Service, who have trained specialists who give free, non-judgemental and impartial guidance.”
MaPS has a wide range of resources to help people improve their financial wellbeing, starting with a conversation, during Talk Money Week and beyond.
Guides to talking about money
For guidance on kick-starting conversations about money, see the Money Advice Service’s guides:
• Read their guide on Talking to your partner about money
• Download their guide on how to talk about money.
Take action to work through your money worries
Money Navigator is a simple tool which helps people navigate their finances in the wake of Covid-19 to find a way forward, get money support now and help avoid future debt problems.
Getting expert support
To speak to an impartial expert for free guidance about your money and pensions, visit the following websites and helplines.
Money Advice Service 0800 138 7777
Pensions Advisory Service 0800 011 3797
Pension Wise 0800 138 3944
Contact Trust Deed Scotland on 0141 221 0999 for tailored Scottish debt help.
If your partner is controlling your money or running up debts in your name, you can find further resources and support on the Money Advice Service website.
The research was conducted by Opinium for the Money and Pensions Service. A nationally representative survey of 5,225 UK adults aged 18+ was conducted from 9th – 19th October 2020, of which 440 were from Scotland. The data has been weighted to a nationally representative profile.
1. There are over 5,463,300 million people over 18 (the age you can apply for credit) in Scotland (ONS). The research found that 37% admit to keeping a financial product a secret from family and friends, equating to 2,021,421 people.
2. There are over 5,463,300 million people over 18 (the age you can apply for credit) in Scotland (ONS). The research found that 37% admit to keeping a financial product a secret from family and friends, equating to 2,021,421 products.
About Talk Money Week
Talk Money Week is an annual public awareness campaign, run by the Money and Pensions Service, to get the nation having conversations about money. Talking about finances has been shown to help people make better informed and less risky financial decisions, feel less stressed or anxious and more in control, have stronger personal relationships and help their children form good lifetime money habits. Talk Money Week will take place from 9-13 November 2020.About Trust Deed Scotland®
Trust Deed Scotland® have helped over [volume] people in Scotland since 2009. Specialising in Trust Deeds and the Debt Arrangement Scheme as two formal debt solutions and advising on alternatives. Find out more about Trust Deed Scotland and get confidential, non-judgemental advice today by calling 0141 221 0999.Can financial advisers help with debt?
Financial advisors are able to give you advice on investment opportunities, tax and wealth management. The types of financial products that typically seem out of reach for people struggling with unaffordable debts.
Fully qualified financial advisors can give you advice on anything from mortgages to pensions but surprisingly, financial advisors help with debt extends to only making a referral to a qualified debt advisor.
In order to be able to offer you the correct debt advice, an individual should be qualified in the correct discipline.
However, help with debt can be sought from a variety of places – most of which, will give you help with debt without charging a fee for their advice.
Debt Problems – What to do and where to get help?
If you have debt problems and you’re wondering what to do and where to get help with your debts, the good news is that no debt problems are unsolvable. It might not always be quick or easy, but there’s normally always a route to resolving debt problems, from one credit card default to cases where an individual can owe tends of thousands of pounds to a number of their lenders. It just wouldn’t typically be a financial advisor who would help you with your debts. When you have debt problems in Scotland, the earlier you deal with your debts, the easier they are to deal with and sometimes, the debt problems may not require a complete overhaul of your outgoings – it may be possible to come to an arrangement with the people you owe money to, also referred to as your creditors. If you have debt problems that are unaffordable, you can get experienced debt advice in Scotland from Trust Deed Scotland®, or alternatively you can approach a local money advisor or debt charity in Scotland. At Trust Deed Scotland®, we’re proud of our record in the industry, having helped over [volume] people in Scotland, and over [reviews] reviews from our clients. For us, we feel it’s important that when you do have debt problems, and you are looking at where to get help, that you are able to get the best advice. Ultimately, if you have debt problems – our advisers would talk through your situation, and give you balanced advice that puts you in control of the decision, knowing all the facts and alternatives.How to get help with debt in Scotland?
As Trust Deed Scotland® is owned and operated in Scotland, we’re experts in Scottish debt solutions. It may be a surprise to learn that getting help with debt in Scotland is different from the process in England, Wales or Northern Ireland – thanks mostly to our unique legislation we have in Scotland. You may have heard about IVAs, which are a solution open to people south of the border but you’re unsure of the differences between IVAs and Trust Deeds. It’s another reason why financial advisors can’t help with debt as they simply don’t know the legislation as much about the pros and cons, as a company such as Trust Deed Scotland®. Similarly, it’s also possible to investigate other ways to clear your debts including debt consolidation loans in Scotland, but this can sometimes cause more problems if undertaken without examining the cause for debt in the first place, and more precisely – your affordability. If you’re looking at how to get help with debt in Scotland, you can find out more about managing your money and get debt advice, by visiting the Money Advice Service, an independent service set up to help people manage their money.Who can help me with debt?
Few people actively seek to deliberately get themselves into debt. While it’s also true that debt comes from spending money you don’t have, in reality, it’s a change in circumstances, like personal illness, divorce, mental health problems, losing your job, or a sudden trauma caused by the death of a partner rather than frivolous reasons. Some of these changes in your circumstances can combine together to create a debt spiral and added to this, there is still a stigma attached to debt, meaning that people struggle on without seeking help with their debts. You may already be aware of the terminology thanks to ads on that you’ve seen on TV, radio, or social media and ask yourself the question of Is A Trust Deed A Good Idea? This question is common and while Trust Deeds are a good solution for those individuals who are eligible for it, in truth there are other solutions such as the Debt Arrangement Scheme, or Minimal Asset Process, which is a form of bankruptcy aimed at people who are struggling with debts. While it’s a solution that shouldn’t be taken lightly, it can be a better solution for some individuals. In short, if you’re asking who can help you with debt – the best advice that we can give you is to seek help immediately and get an idea of what your options are. If you do something about your debt today, you can stop worrying about it tomorrow. Are you ashamed of your debt? Talking about debt is the first step to tackling it. If you need help with debt, and you’re at the stage of requiring a Trust Deed, Debt Arrangement Scheme or Sequestration then you should seek the help of a qualified money adviser. Only a qualified Insolvency Practitioner can formally setup a Trust Deed or Sequestration. And only an Insolvency Practitioner or Money Adviser can setup and maintain a Debt Payment Programme as part of a Debt Arrangement Scheme. Call us on 0141 221 0999 today for a confidential chat with one of our experienced debt advisers. The debt advice that we offer is non-judgemental and we’ve been able to give over [volume] people help with their debts in Scotland. We’re also rated no.1 on Trustpilot in the Debt Relief category in Scotland, which is largely thanks to our ongoing commitments to treating customers fairly, and training processes.What’s the differences between secured and unsecured loans?
What is the difference between a secured and an unsecured loan?
Find more articles like this in our Info Hub – A secured loan means that you borrow a sum of money and put up something of value as security – usually your home. Therefore, an unsecured loan is unattached to any asset that you own. When you get a loan from a bank or a loan from a credit union – they are typically unsecured loans in the same way that credit cards, catalogues and bank overdrafts are also unsecured lending types. Two other types of unsecured loan types are payday loans and guarantor loans, both of which have come under heavy criticism in recent years for mis-spelling. Lastly, another unsecured loan is a student loan – The student loan repayment arrangement varies due to the particular payment plan you are on. A secured loan against a car is usually refered to as a logbook loan and some ‘rent-to-own’ lenders exist(ed) such as Brighthouse, allowing an individual to purchase goods on a secured loan basis. With a secured loan, if you do not keep up the payments, the lender can sell the item used as security, even if that means leaving you homeless. With an unsecured loan debt, if you don’t keep up the payments, the lender can take action in the courts to get the money back. More commonly, and before it gets to that stage – they will serve a default notice against you as per the terms of Consumer Credit Act of 1974. A default will impact your credit rating and more likely result in them passing the unsecured loan debt onto a debt collection agency to collect on their behalf. If it does end up in court, you will usually be ordered to pay off the loan in regular instalments set at an amount the court decides you can afford. The lender can use a range of other measures if you do not make the payments in line with the court order. It is more common for local authorities to pursue you for enforcement actions such as wage arrestments in Scotland, however, this is very far down the line of non-payment of your unsecured loan debt. If you currently have an outstanding wage arrestment claim issued against you, you can investigate the use of a Statutory Moratorium to buy yourself more time and give you some breathing space. If the wage arrestment has already been processed and your employer is taking a deduction from your wage – give us a call on 0141 221 0999 and we’ll review your Scottish debt help options with you. The APR% of a secured loan is usually more favourable than an unsecured loan because lenders run fewer risks of not getting their money back. An unsecured loan will generally cost you more, but there’s no danger of losing your home if you can’t keep up the payments.What Are Debt Consolidation Loans?
Debt consolidation loans are a single loan taken out to replace your other debts, however, are they the best option available for restructuring your finances? Taking out a consolidation loan when you are already in severe debt might not be the best option for you. You may need to consider other aspects. Think about: Cost: Is the interest rate very high? Will the new debt consolidation loan really save you money? Security: Is the loan secured against your home or car? If so, you could risk losing your home/vehicle if you fail to keep up the payments on the consolidation loan? Other existing debts: Make sure the consolidated loan covers all your existing debts except those which have a lower APR than the consolidation loan. Otherwise, you could find yourself having to pay back loans you had forgotten about at a time when you have already overcommitted yourself by paying back the debt consolidation loan. New debts: Once you’ve consolidated your loan, don’t build up new unsecured debts elsewhere. Cut up your credit cards so that you can’t use them.Secured vs Unsecured Loans – How much is too much to borrow?
Before taking on any new borrowing from an unsecured loan or a secured loan, think carefully about whether you will be able to afford the new repayments on top of your existing ones and think about what would happen if your circumstances changed. To help you do this, draw up a budget taking into account how your income and spending are likely to change over the lifetime of the loan. Also look at how much you will pay back in total – multiply the monthly payment by the number of payments – You may be shocked. Recalculate your budget as if you had already taken out the loan. Do the results now suggest you’ll run into problems? Calculate the effect of a change in interest rates on your mortgage. Think carefully before you borrow more to try to get out of a problem. A new loan may appear to help for a time but will make matters worse if you run into problems repaying that loan too. Check out budget and loan calculators to understand the real impact of your borrowing. And get advice to help you sort out the root of the financial problem.Debt Consolidation without borrowing?
Depending on your situation and how much you owe – it’s possible that an unsecured loan or secured loan may not be the best way of managing your unaffordable financial difficulties. If you reside in Scotland and have unaffordable debts; you may qualify for the Debt Arrangement Scheme. The DAS in Scotland uses government legislation that allows you to enter into a formal debt management solution which freezes all interest and charges. Find out more about the advantages and disadvantages of the Debt Arrangement Scheme. In addition to the Debt Arrangement Scheme, if you owe more than £5,000 to two or more unsecured creditors, you may qualify for a Trust Deed, which also uses legislation to write off some of your unaffordable debt and allows you to enjoy a brighter future after a typical period of 48 months. Find out more about the advantages and disadvantages of Trust Deeds and how Trust Deeds work. Depending on the severity of your financial difficulties – you may also qualify for Sequestration – the Scottish insolvency equivalent of Bankruptcy. There are pros and cons to each but the outcome has the same goal; affordable debt repayments that allow you to put your financial difficulties behind you. In order to make sure you’re given the best advice on debt consolidation with our without further borrowing, we would always advise that you seek expert debt advice. Trust Deed Scotland® can be reached on 0141 221 0999 or you can contact Trust Deed Scotland via an online enquiry form, email, or in person* however, we recommend trying our Trust Deed Wizard tool to start the process as your first step. After a confidential phone call with one of our qualified debt advisors, we will be able to explain the pros and cons of all available solutions and provide you with a personalised illustration of what your options are, and how much you would be able to reduce your monthly repayments down to. *When lockdown restrictions allow this to be done so safely. May not be suitable for all. Can affect credit rating. Free advice also available from moneyadviceservice.org.ukWhat debts does a Protected Trust Deed include?
The type of debts that can be included in a Protected Trust Deed are generally those that are described as unsecured, with some exceptions.
When you enter into a Protected Trust Deed in Scotland, most of your unsecured debts will be included and this may include:
- Credit Cards
- Personal Loans
- Overdrafts
- Catalogues
- Gas and Electric Arrears
- Council Tax Arrears
- Payday Loans
- Store Cards
- Buy Now Pay Later Agreements
- Any Other Outstanding Personal Bill e.g. Vet Bills
What types of debt are excluded from a Protected Trust Deed?
Typical debts that aren’t included within a Protected Trust Deed include:- Mortgages
- Secured Loans
- PCP and PHP Agreements
- Hire Purchase Agreements
- Court Fines
- TV Licence Arrears
- Student Loans
- Child Support Arrears
Can joint debts be included in my Protected Trust Deed?
A joint debt in Scotland is a debt that has your name and the name of the other person you entered into it with on the agreement. A joint debt can be included in a Protected Trust Deed, however, the other person named on the debt will still be responsible for making payments towards it. This is also true of guarantor loan debts in Scotland. If you have some of the debt written off, the other person will still be asked to pay the remaining money back, therefore that debt isn’t written off in the same way that the other debts that included in the Protected Trust Deed would be written off. If you have joint debts, and are thinking about applying for a Protected Trust Deed, you should contact us for confidential advice first. We can let you know how it would affect you and the other person named on the debts.What happens to my debt during a Protected Trust Deed?
Before Trust Deeds are agreed, proposals are put to the creditors who monies are owed to. If the creditors agree to the Trust Deed, you’ll make monthly payments towards the Trust Deed for 48 months, or 60 months if this was agreed as an extended duration for the Trust Deed. When your Protected Trust Deed has been complete, you’ll be discharged. At this point, any balances outstanding on the debts included in your Trust Deed will be written off.Is a Protected Trust Deed right for me?
To find out if a Protected Trust Deed is right for you, we advise you to try our online Trust Deed Wizard® tool. This will begin the process of finding a debt solution for you, based on your own unique circumstances. When you’re looking at the types of debts that can be included in a Protected Trust Deed, you may have debts that can be included such as those owed to family and friends but you may benefit from speaking to Trust Deed Scotland® in order to find out the advantages and disadvantages of doing so. There are alternative solutions to Trust Deeds in Scotland, one of which is the Debt Arrangement Scheme. When you speak to an expert money advisor, all pros and cons will be explained to you, and sometimes the type of solution that fits your needs best may not be a Protected Trust Deed after all. When considering your decision on whether a Protected Trust Deed is right for you, we have previously written articles in response to questions we’ve previously been asked such as Is A DAS Worth It? or Is A Trust Deed A Good Idea? Trust Deed Scotland® has thousands of reviews on Trustpilot, however, we also offer Debt Arrangement Scheme and Sequestration advice, which means you will be given balanced, fair advice that puts you in control of the decision-making process.Best Way To Consolidate Debt In Scotland?
If you’re experiencing financial difficulties and are assessing your options to repay your debt, you may have considered that a consolidation loan is the best way to consolidate debt for you.
But don’t discount the options of Trust Deeds, Debt Arrangement Scheme, and alternatives because there are circumstances where one of these debt management tools could provide a more suitable solution.
Whilst at first glance the solutions may appear to be similar and share many of the same advantages, fundamentally, they are very different.
Consolidating debt usually involves taking out new credit in the form of a Debt Consolidation Loan to pay off existing credit. Extra costs can be involved and to understand the risks, it’s important to get impartial advice before going ahead with your application.
Statistically, many people who take out a further debt consolidation loan will end up using credit again. Therefore, they’ll then be repaying debts to more than one company again. If you’re struggling with unaffordable debts at the moment, you may not be able to afford payments to a Debt Consolidation Loan. Examine your income and expenditure to find out what money you have available and make sure you can comfortably afford the repayments.
Which option is best for you will be heavily influenced by your personal circumstances. You should, therefore, take time to understand each option, to ensure you come to an informed decision and always seek balanced expert debt advice before committing to any financial product.
Here are a list of the main differences between a Trust Deed and a Debt Consolidation Loan, which can be used to assess the best way to consolidate debt on your terms.
Duration
Loan: The duration of a debt consolidation loan will be determined by how much you borrow against how much you can afford to repay each month. The maximum duration typically for an unsecured consolidation loan is 10 years. Trust Deed: The Trust Deed has a fixed duration of typically 48 months, after which the Trust Deed completes and unaffordable debts are satisfied. Any debt left unpaid at this point is written-off under the terms of the Trust Deed.Affordability
Loan: Repayments to a consolidation loan are offered by the creditor based on the amount required each month to repay the debt over a given duration. The borrower must assess whether they can afford the repayments for themselves before they accept the agreement. Trust Deed: Payments are set to what is deemed to be affordable to you.Debt Written Off
Loan: There is no debt write-off with a consolidation loan. Unless any settlement figures can be negotiated in writing, the full debt must be repaid. Trust Deed: Any outstanding debt remaining after the fixed term has completed must be written off by your creditors.Credit Rating
Loan: If you keep up to date with all your repayments, your credit score won’t be affected by having a consolidation loan. Trust Deed: Entering into a Trust Deed has a detrimental impact on your credit rating for 72 months. If you have a poor credit history (for example, a record of missed payments and defaults, decrees, or previous insolvencies, such as a Trust Deed or Sequestration) you’re more likely to be offered consolidation loans with higher interest rates. If this is the case, consolidation loans may not be the best way to consolidate debts for you.Flexibility
Loan: A debt consolidation loan is a legally binding contract, just like any other unsecured loan. Failure to maintain payments can result in legal action being taken against you which could, ultimately, lead to you being sequestrated. Trust Deed: A Trust Deed has a degree of flexibility if payment problems occur. A temporary payment break can be given by the Insolvency Practitioner if deemed necessary, or they could reduce your Trust Deed payments and extend the Trust Deed term without the need for creditor approval.Fees and Costs
Loan: All interest and administration costs are built into the loan repayments and paid for by the borrower. Trust Deed: All Trust Deed fees are deducted out of the monthly Trust Deed payments and in most circumstances, are borne by the creditors. There are typically no initial setup fees for a Trust Deed from a reputable firm, like Trust Deed Scotland.Debt Consolidation Example – Loan Vs Trust Deeds
If you are currently paying £636 per month on debt repayments, owe £20,000 and found a loan at 12% APR. This would compare as follows: Loan: Debt Consolidation Loan Required ✓ £20,000 ✓ Term 48 Months ✓ New Monthly Payment £521 ✓ Total Repaid £24,992 ✓ Monthly Debt Repayment Reduced by 18% Trust Deed: Total Debt Included ✓ £20,000 ✓ Term 48 Months ✓ New Monthly Payment £175 ✓ Total Repaid £8,400 ✓ Monthly Debt Repayment Reduced by 61% You may be able to get a debt consolidation loan with a more favourable APR%, or longer term. These may be typically secured against your property. However, if you’re already struggling with debt – the APR% may be typically higher. We would always suggest looking at all Scottish debt solutions also.Debt Consolidation Loan Considerations?
If you think that the best way to consolidate all your debts is a debt consolidation loan, rather than a Trust Deed or other Scottish debt solutions.- Always pay your existing debts in full
- Cut up all your credit cards and cancel previous credit agreements, otherwise, you might be tempted to borrow more money
- Get tailored debt advice before going ahead with this option – there may be better ways for you to deal with your debts
Where Can I Get Scottish Debt Help?
You can get Scottish debt help today with Trust Deed Scotland®. There are a variety of debt solutions available in Scotland to help deal with your debts, regardless of the minimum or maximum amount of debt that you owe. If you’re looking to find out the best way to consolidate debt, you can find out more about the solutions by visiting our online debt advice page. Or, if you would prefer to speak a qualified debt expert, you can give us a call on 0141 221 0999 to find out more. Any advice offered is confidential, friendly, and non-judgemental. Find 1000’s of 5* Reviews on TrustPilot. We’re the leading debt relief company in the whole of the UK.Payday Loan Debts
Payday Loans Debt have created a problem, not the quick-fix solution that so many seek.
Amidst the country’s growing consumer debt crisis, thousands of people in Scotland are turning to high-cost loans to make essential payments and ends meet. Despite constant bad press and recent regulatory crackdowns, the most common port of call is the Payday Loan because of its perceived convenience.
We want to show you the real cost of Payday Loans – all too often, reliance on high-cost, short-term credit serves as an entry point to a more serious debt problem: one that could last a lifetime, and not just until payday.
How Payday Loans work
As the name suggests, payday loans are short-term loans designed to tide you over, meet essential payments or living costs until your next payday. In 2018, 53% of borrowers withdrew a payday loan for living expenses or utility bills. A Payday Loan is paid into your account in one lump sum, and you repay in full, with interest and charges, typically at the end of the month. However, payday loans now commonly stretch over 3 months, with the option to ‘rollover,’ where for a fee the lender agrees to extend the repayment period even further. One condition lenders commonly attach is that you set up a recurring payment, essentially a direct debit allowing them to take a repayment instalment directly from your account on the agreed date. Despite their high-cost Payday Loans are a popular short-term solution, generally due to their ease of access and the simplicity of the whole process. Payday Loans allow you to get a ‘loan on your lunch hour,’ bypassing the timely process of borrowing from a mainstream lender. In 2017 the Competition and Markets Authority found that 85% of borrowers took out their payday loan at the click of a button and this figure has likely increased since then. Combine this with the fact that most lenders don’t conduct credit checks (and advertise this) and it’s easy to see where the perception of Payday Loans as ‘free money’ comes from.1,500% interest: the real cause of Payday Loan Debts
The number of payday lenders active in the UK has decreased significantly due to new regulatory requirements. Worth over £2 billion in 2013, the industry is now worth an estimated £220 million today. As a result, it has been argued that the industry is now less predatory, and consumer friendly. We wholly disagree. A payday loan is subtly expensive and can create a debt problem or make an existing one a lot worse in just a few short months. Although the average loan size is just £260, this can be deceiving. Servicing debt with debt is a risky business and should be practised with the greatest of care. You can consult our guide on safe debt consolidation for more information. Due to inflated interest payments, payday loans have no place in any effective debt consolidation strategy. Over a year, the average annual percentage interest rate of charge (APR) is typically between 1,200-1,300% and can be up to 1,500%. For comparison, a typical credit card has an APR of 22.8%. To give a practical example, we used lender’s own loan calculators to get a quote for a £500 loan. Quickquid offered a maximum repayment schedule of 3 months with an APR of 1294.1%. Therefore, the total interest on a £500 loan was £360, making the total repayment £860.Payday Loan Debts and the debt spiral effect
Payday Loans are one of the most common debts our clients have and with these interest charges, it’s no small wonder that they have dragged thousands into deeper waters. More and more research is emerging to back up our view that they are a major contributor to the debt spiral. In America, for example, the Centre for Responsible Lending found that 76% of Payday Loans are taken out to pay off older payday loans. They reported further, that although most are scheduled to be paid within two weeks, on average the borrower stays in debt for more than a year, demonstrating how a quick fix often leads to potentially long term debt. Borrowers regularly only notice the true cost of their loan at the time of repayment making the rollover option all too tempting. As the months go by, interest and charges snowball with their debt now standing at three to four times what it was. While it’s true that the situation is better here in Scotland than it is in the United States, there is a misinformed consensus here, that the UK’s financial regulator), have effectively addressed this cycle with recent reforms. In 2015 they introduced a price cap on the interest of payday loans, and limited charges to £24 per £100 borrowed. The result is that no customer would repay more than double the amount they had borrowed. This is a highly concentrated solution that regulates at the level of the individual loan. Consider the whole picture, and the trapping effect of payday lending is still clear. 75% of customers take out more than one payday loan per year – on average they actually take out 6. Consider also that 25% of borrowers take advantage of the rollover option at least once. Compound interest also comes into play if you borrow for more than one month, and it continues to accumulate each time you choose to roll over. In short, the new regulations only ensure you pay back a maximum of double your original loan if you take out a single loan and repay it the same month. It’s still very easy to multiply your debt rapidly with payday loans and create a much more serious debt problem.Alternatives and other considerations
Equipped with a more realistic understanding of payday loans, it’s important for you to consider alternatives. The one attraction payday loans will always have is that they are quick, easy and cover every cash flow emergency possible. The good news is they are not the only show in town anymore. Be it guarantor loans; peer-to-peer loans and other new ‘fintech’ initiatives; or credit unions, there are other options out there. If your last wage isn’t stretching far enough and you have an upcoming bill, essential payment to make or an unforeseen breakdown that needs to be repaired, try the Money Helper Payday Loan portal which is dedicated to payday loan alternatives as a starting point. As a final note, if you have very recently taken out a payday loan and feel you could struggle to repay, make sure to take advantage of the seldom advertised 14 days ‘cooling off period.’ This allows you to withdraw from the agreement if you change your mind within the first two weeks. You will only have to pay the interest on the credit you have used, and any other charges must be refunded to you.Need help now?
Perhaps this blog has reached you too late, and you already find yourself in an unmanageable debt spiral. If so, we can help. If you have multiple high-interest payday loans you are repaying individually you may qualify for a Trust Deed. A legal and binding agreement between you and your creditors, overseen and administered by an Insolvency Practitioner (IP.) A Trust Deed allows you to repay your debts in a single, reduced monthly payment distributed to creditors by your IP and write off the debts that you simply can’t afford. For more information on Trust Deeds read our guide on how they work. In time, the Protected Trust Deed will give you the financial fresh-start you need. We are here for you if you are in an unmanageable financial position and can talk you through your options, our service is no obligation and 100% confidential. Consider alternatives too, like the Debt Arrangement Scheme in Scotland. We have helped thousands of people like you out of debt so far. For a detailed, comprehensive consultation with one of our experienced debt advisers, get in touch today on 0141 221 0999 or find out if you qualify for a formal debt solution. Our team of friendly debt advisers are ready to help you.Should you use a Credit Card or Personal Loan?
If you’ve been trying to decide whether or not to use a credit card or personal loan for finance there are many things to consider.
Depending on your credit limit and the price of what you are purchasing, you may be surprised to learn a credit card may work out more cost-efficient than a personal loan. Many credit cards come with the perk of an interest-free period. These periods vary in length but the maximum on offer is longer than a 2 year period.
If you are able to clear the debt off within this time you will save money as you won’t be paying the interest on a personal loan and clearing the debt. If you haven’t cleared the debt off within the specified period, depending on you your credit score, you could potentially transfer the remaining balance to another interest-free credit card to finish paying the debt off interest-free.
If you don’t think you would be able to pay the debt back within the interest-free period, you could look for a card with a low-interest rate that would last for the duration of your payments. You could spend less on interest than you would with a personal loan. Check how much you would be spending monthly and see what is best for you.
If you’d like help with your finances, Trust Deed Scotland can provide you with experienced debt advice to help you make the best decision for you.
A Trust Deed is one of several options to get you back on track.
Try the Trust Deed Wizard tool now to find out more, or take five minutes to read our article Is a Trust Deed a good idea?
Depending on what you’re buying and where you’re buying it from, you may not be able to pay by credit card but only by debit or cash. If this is the case, you could get a card that allows money transfers.
This means you could transfer money to your bank account which you can then withdraw or spend by debit card.
Doing it this way will cost extra as there will be a fee but it means you can pay up the card as normal and get access to the funds to pay companies who don’t accept credit cards. Again, check the fees and interest rates and calculate if you would spend less money overall than you would with a personal loan.
See our Debt Advice Reviews for thousands of independently verified reviews showing how we’ve helped customers improve their quality of life.
If you need a substantial amount of money, you may be unable to get a credit card with a high enough limit. In that case, you would need to go down the route of a personal loan. Borrow the smallest amount possible in order to meet your needs and choose the shortest repayment term possible that is affordable for you.
Make sure you take into consideration what your current incomings and outgoings are and don’t overstretch yourself and put yourself in a difficult position.
It’s easy to be tempted into borrowing more and increasing the repayment term, however, you will cost yourself a lot more in interest in the long run.
For example, if you borrowed £8 000 at 9% over 4 years, you would pay £1 555.86 in interest but if you borrowed the same amount over 10 years, you would pay £4,160.87 in interest.
How much is your overdraft costing in fees and charges?
Overdrafts are often overlooked and you could potentially save money every month by considering switching the type of your account or your bank.
Another factor to keep in mind is it may cost you less to borrow slightly more. This doesn’t mean borrow thousands more than you’d planned.
Check the individual loans interest rates and thresholds and you may find borrowing £4500 costs you more overall than borrowing £5000, depending on the interest rates. Surprisingly, some companies charge up to 33% more interest on a lower loan than a higher one, so you would end up spending more overall once the interest had been accounted for.
Make sure to check for hidden costs when considering a personal loan.
You are entitled to pay loans off early but you may be subject to a fee which is usually around two months’ interest. You are also able to make overpayments to your loan without charge, (depending on when you took the loan out if it is pre-existing and how much the overpayments are).
Have you been given conflicting information about the impacts of bad credit?
We’ve dispelled some of the common bad credit myths to enable you to make an informed decision about what step to take next.
Many loans have lock-in fees meaning if you want to switch to a cheaper interest rate, you will be fined for moving. In this case, you will have to determine whether it is cheaper to stay on the higher rate of interest or transfer to a lower rate and pay a penalty.
It may actually be cheaper to stay where you are depending on how much the fee is. Always check what the early repayment fees are before taking out a loan or check the terms and conditions in your paperwork if you have an existing loan.
Finally, remember the interest rates advertised for credit cards and personal loans are representative.
This means, 51% of people who apply will receive these rates. The other 49% will pay extra. The only way to find out what rate you will be offered is to apply and this will affect your credit score so do your research before deciding where to apply.