Will a fall in Scottish unemployment reduce trust deeds?

3rd May 2011

According to the most recent official figures, unemployment in Scotland is starting to fall. This is of major importance in terms of preventing the build-up of unaffordable debt. A loss of employment, even if it is temporary, is one of the key factors which will eventually result in the need for trust deeds.

Between December 2010 and February 2011, UK unemployment reduced by 7,000 to a figure of 2,190,000. Nearly 2,500,000 people in Scotland are currently in paid employment. Figures from the Office for National Statistics point to an unemployment rate in Scotland of 8.1%, which is slightly above the UK figure of 7.8%. The unemployment total in Scotland remains slightly higher than it was at the same time last year.

These figures have generally been welcomed, not least due to the severe weather conditions throughout much of the period, which many assumed would suppress economic and work-generating activity, leading to a risk of a further increase in trust deeds.

Many new jobs are being created in the private sector which will come as a huge relief to workers in the public sector who are facing cutbacks and possible redundancies. As recently reported on this website, the average UK adult has around £8,500 in unsecured debts, which is a level unlikely to be unmanageable should a household lose a salary, prompting the need for trust deeds.

Many adults have credit facilities available which are not currently in use. Often this will take the form of balance capacity on their credit cards or overdrafts. The danger emanating from periods of unemployment is that this credit capacity is used in an attempt to maintain general household expenditure and to continue to service existing debts.

Such activity will push balances upwards, carrying the threat of a debt spiral in which repayments are unaffordable even if new work is found. It is exactly this type of debt which frequently leaves individuals facing the prospect of serious action such as Scottish trust deeds.

Anyone currently in employment who has a level of personal debt is encouraged to take steps to reduce those debts as quickly as possible. An example of an effective action will involve making more than the minimum payment on credit cards. Reduced personal debt will provide protection if the worst happens and your employment is jeopardised in the future, reducing the risk of needing to enter into trust deeds.

If you are facing the threat of ever-increasing debts then you need to take action sooner rather than later. An excellent start would be a call to our obligation free advice line where our trust deed experts will be happy to dispense trust deeds information, advice and support.

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