Head of marketing at General Insurance at Halifax, Paula Llewellyn, said: “As this financial inertia takes hold, there is a serious risk that millions of people could end up sleepwalking into debt. We all need to be aware of the reality of rising costs and try and avoid slipping into the red. It is crucial that everyone takes an active role in checking bills and keeping an updated budget of monthly expenditure in order to pinpoint exactly where income is being spent.”
A spokesperson for Scottish Trust Deed Company, TrustDeeds.net, said: “The phrase ‘sleepwalking into debt’ is an uncannily accurate portrayal of what does happen to people. The most worrying fact is this study is how much people underestimate by how much their bills have risen over the last year. Many of us don’t like to think about our finances and how bad they could be, so we push it to the back of our minds, thinking that we’ve always been able to cover our bills and debt payments so we’ll be ok. Unfortunately it just takes something like being unaware a bill has increased because we don’t check to push us into arrears or a late payment and then the trouble snowballs.
“Most loans sharks and payday loans thrive under these circumstances because the first instinct when someone runs out of money and needs to pay something quickly is often to borrow what they need, and these high street characters make it very easy and quick to do so. The trouble is, if someone is borrowing money to pay normal everyday bills rather than a one off unexpected expense, how will they find the money to pay back the loan plus interest the next month and cover the bills again? That’s when things start getting out of hand.
“Individuals need to be truthful about the state of their finances so they can take steps to tackle it now. If they have debt that is getting out of control, they need to talk to someone about options such as debt payment plans, a Trust Deed or in some cases even sequestration if a financial expert believes that’s the best option for their circumstances.”
Having run out of money to pay bills is all too familiar for the clients of Citizens Advice Scotland (CAS). It recently reported that 13% of debt problems it sees are about council tax arrears, 8% about utility bills and 10% about rent problems.
Chief executive of the Money Advice Trust, Joanna Elson, said: “Increasing energy costs mean most of us have to pay increasing attention to how much gas or electricity we use and whether or not we have the right tariff. It is a serious problem in this country that so many people will be wondering whether they can afford to boil a kettle or turn on the heating.
“The cost of heating and powering a home takes up much more of our income than it did six or seven years ago. There will be expensive gas and electricity bills dropping on to doormats across the country this month, and these bills must be treated as a priority, as gas and electricity companies can cut off your supply in a few weeks if you don’t pay them. No court is involved in this decision.”