Trust Deeds Increase as Household Finances Worsen

9th February 2011

A recent report produced by Markit, has vividly illustrated the financial concerns of many householders throughout Scotland. Their Household Finance Index has reported that around a third of households in the UK experienced a worsening of their financial position in January alone. Only around one in twenty households reported that their finances had seen an improvement in January

This will come as no surprise given the ever-increasing inflation rate, especially as it relates to essential items such as food and fuel.

Those with mortgages were especially gloomy in their responses, perhaps unsurprisingly given that they face the threat of housing cost inflation if and when mortgage rates rise.

One side-effect of worsening household finances and the reluctance of banks to lend is the surge in popularity of payday loans and other expensive types of credit.

The Independent has reported that one major player in this market, Provident, is reporting record results, with their executives and shareholders reaping the financial rewards. Their 46 year old Chief Executive is reported to have been on a basic salary of £587,000 in 2009, with bonus payments payable in addition should the company perform well. Provident is reported to be amongst the top 25% of payers compared to companies of a similar size.

A situation where household finances are being squeezed, and increasing numbers of people rely on high-cost credit to get by, can only be seen as an increasingly dangerous cocktail. The end result seems likely to be an upsurge in personal debt distress and an increased take-up of serious debt solutions, such as a protected trust deed.

A Scottish trust deed should always be seen as a last resort; however, there is much that families can do to avoid finding themselves in a position where it becomes necessary. The most basic measure is the very old-fashioned step of drawing up a budget. Listing all sources of income and expenditure may not seem like an exciting way to spend an evening, but the reality-check it can create will potentially allow people to steer their finances back on track.

Many people find that a few cutbacks (or generating a little extra income) allow them to balance their finances and avoid the risk of sinking into debt. If the numbers do not add up however, it’s time to seek advice from a professionally qualified debt adviser or reputable trust deed company, rather than taking out high-cost finance, which will only make matters worse.

Debt problems tend to worsen if they aren’t dealt with promptly, and the debt solutions available tend to increase in severity and reduce in choice the worse a debt problem becomes.

For further advice from a trusted source, please scan the headings of articles on our Trust Deed Advice Forum and read those which you feel apply to you. You can also chat to other people who have been through, or are in the process of going through similar financial difficulties.

Trust Deed Latest News