Research from credit reference agency Experian indicates that around three out of 10 people in Glasgow and Manchester experience high levels of financial stress. Other high stress locations include Nottingham, Middlesbrough, Hull and Liverpool.
Ken Pattullo, partner at Begbies Traynor’s Glasgow office, says: “Many people around the country are placing themselves under very real financial pressure. They live right on the boundaries of what they can afford, so any change in credit availability or personal circumstances quickly takes its toll.
“We have a debt culture. There is a prevalent view that if we cannot afford something it doesn’t matter. We’ll simply buy on credit and worry about it later. Credit allows people to supplement their incomes and achieve lifestyles to which they could otherwise only aspire.”
Too often, say the experts, it is only when something goes wrong that the realisation strikes that income cannot cover outgoings, and the pressures crowd in very quickly.
Ken continues: “As a country we need to look hard at why so many people are in debt, but this is not something that will be resolved overnight. For many, there is a more immediate concern – how to tackle the problem at an individual level when the wheels come off.”
The most important step is to recognise the problem rather than simply burying the head in the sand in the hope that it will somehow disappear. Best practice is to seek professional advice early - the quicker action is taken, the better the chance of reducing the amount of pain involved in finding a resolution.
There are alternatives available for those who are really struggling. The ‘traditional route’ is to be declared bankrupt. However, for many this is an unattractive option. Professional people in particularly, often feel there is a social stigma attached. Many do not wish to ‘walk away’ from their debts because it means others will lose out. In some instances bankruptcy may be the right option and may not be as daunting as may at first appear.
An alternative route is the Trust Deed. A Trust Deed is designed to enable those who cannot repay their debts a way to establish, with the aid of a Trustee, a monthly repayment schedule based on what the individual can afford to pay. It will last for a specified period, usually three years. When the specified term comes to an end, any remaining debts are written off.
Ken concludes: “There are options available for those in debt, and the government is taking steps to increase these and help those with problems through legislation. However, the really big challenge is to change people’s financial mindsets. The old adage, neither a borrower nor a lender be, is sound advice for all.”
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