No wonder trust deeds are so common when 42% of us run out of money before payday
27th September 2010
According to the Association of Business Recovery Professionals (R3) 11% of us regularly run out of money before payday and 31% of us do so occasionally. The average time for such a struggle to begin is twenty days after payday.
Three main reasons for this problem have been identified in the research.
35% of those who sometimes struggle, complain that paying debts such as credit card bills causes them to run out of money. This may be the start of a cycle extremely familiar to debt advisors, whereby the repayment of credit forces an individual to take on further credit to be able to pay for essentials such as housing, utility bills and food. This cycle can lead to serious consequences, including bankruptcy or a protected trust deed, as in such circumstances the overall debt total can spiral out of control very quickly.
Another 15% reported that paying other debts such as mortgages or loans for big-ticket purchases (such as cars) led to them running out of money before the end of the month.
25% of those who struggle admit the reason is because they have chosen to spend their money on non-essential goods, or on leisure activities and socialising.
This situation may well get worse as the country faces up to the prospect of increasing mortgage interest rates in the future, as well as public sector cutbacks and additional tax deductions for those who have underpaid tax in recent times.
When it becomes apparent a person simply cannot manage their commitments without taking on extra debt, they are urged to seek debt advice straight away. Options such as debt management plans, the debt arrangement scheme or a protected trust deed exist to deal with unmanageable debts, while prioritising a person’s ability to meet their essential needs without the requirement of further credit.
For a trustworthy and comprehensive resource of advice regarding the various debt management options such as trust deeds and protected trust deeds, visit the trust deed advice forum on this website.
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