It’s apparent from the demographic data collated by the survey that the “debtor population” in Scotland is currently changing. Older persons, women and those who rent their home privately have become increasingly prone to serious debt problems. These changing demographics may demonstrate how increasingly the “squeezed middle” is becoming exposed to financial difficulty arising from debt.
The survey also makes it clear that there is very little public awareness that the Scottish Government is considering changes. These changes might greatly alter the options available to someone that is suffering financially and it’s therefore surprising that greater efforts haven’t been made to engage with the “debtor public” on these subjects before making potentially huge changes to personal insolvency law.
Proposals to restrict access to protected trust deeds (through the imposition of a minimum dividend for creditors) have been under consideration. There have been signals that the Scottish Government may retreat from this position which critics believe would make trust deeds the preserve of debtors with higher incomes only. The Trust-Deed.co.uk survey clearly demonstrates that this retreat must happen.
Respondents made it clear (in very significant numbers) that such a change would result in delays in seeking debt advice at all, increased debts being accrued and potentially much poorer returns for creditors being delivered. 37% of respondents indicated that they would have probably delayed seeking advice if access to trust deeds had been restricted and 54% indicated that delays might possibly have occurred.
More worryingly there may be serious public health considerations that also apply. When asked how they would feel if their options to deal with their debts had been restricted, 83% of those currently using Scottish trust deeds replied that their mental wellbeing would have been affected and 59% said their physical wellbeing would suffer. With a further 51% reporting that they would not be able to work effectively and 44% saying personal relationships would be affected the potential for disaster is clear and apparent.
Against the instincts of many debt professionals, large number of survey respondents indicated that they would like financial education to be in some way attached to their trust deed or sequestration (bankruptcy)
In fact 52% of those currently subject to protected trust deeds would welcome some form of financial education and the figure rises to 64% of those that have been discharged from completed trust deeds in the past. Modules based around every day budgeting, emergency budgeting, planning for life changes, choosing suitable financial products and finding reliable financial advice all attracted significant support.
The Scottish Government has also consulted on whether very recent debts should be excluded from Scottish trust deeds and sequestrations. The feedback gained from the Trust-Deed.co.uk survey suggests that this may not be necessary. A tiny minority indicated that they would use credit for purposes that would appear frivolous (to most reasonable people) once it was apparent to them that their debt problems were serious. Credit in such circumstances would typically only be used to fund essential purchases rather than luxuries according to respondents. It would therefore appear to be inappropriate to exclude recent debts in the vast majority of circumstances.
For the full survey results and analysis please visit: