Tag: debt

Expansion of free debt advice service

More people will be able to benefit from free debt advice following investment from the Scottish Government. More than £2.4 million will be distributed among a number of advice organisations to expand their services and invest in more effective methods to help individuals with problem debt.

The investment will assist projects offering face to face advice using video calls and projects aimed at moving debt solution processes online. This investment will also help the debt advice sector to manage the expected increase in demand as a result of the economic impacts of coronavirus (COVID-19).

AdviceUK will be one of the new recipients of funding and has 70 Scottish-based partners who will now be able to extend their services.

Minister for Communities Aileen Campbell said: “I am pleased that this funding will enable more people to access free debt advice, especially as we expect to see increased demand on these services due to the long term effects of COVID-19.

“Our Debt Advice Routemap sets out our vision for a user-friendly and collaborative free debt advice system in Scotland. Through this additional investment we aim to distribute funds across Scotland, focusing on those hardest to reach, including those who maybe have never sought advice before.

“Debt advice services are looking at innovative new approaches, using technology and new ways of working. I would encourage anyone who finds themselves struggling with problem debt to seek help at the earliest opportunity.”

AdviceUK Executive Director Chilli Reid said: “AdviceUK warmly welcomes this funding from the Scottish Government, which will make a huge difference to people struggling with money worries.

“Our members serve communities across Scotland, and this investment will support them in their vital work tackling child poverty, supporting households on low incomes, and helping those most exposed to the impacts of COVID-19.”

The funding is part of the Financial Services Levy for debt advice which has been increased by the UK Government in response to the expected growth in demand for free debt advice due to the long-term effects of COVID-19.

The funding was devolved to the Scottish Government in 2019 and the Debt Advice Routemap was launched to help improve access to services across Scotland.

Established in 1979, Advice UK is the largest network of independent advice providers in the UK.

Granton Information Centre has continued to provide an advice service throughout the coronavirus lockdown, supporting people with debt, housing and employment issues.

If you need help to deal with mounting debts, or are unclear about which benefits you may be entitled to, call Granton Information Centre on 0131 551 2459 or 0131 552 0458 or you can email info@gic.org.uk

GIC advice sessions to resume at Muirhouse Medical Group

Granton Information Centre are delighted to announce that we are resuming our benefits/money/debt advice outreach service at Muirhouse Medical Group from the beginning of September.

The appointments are with our advisor Kay on Wednesday afternoons and can be made by contacting the surgery directly on 0131 202 4444.

Please be aware these appointments are for those people who are registered with Muirhouse Medical Group only.

MSPs call for significant changes to debt solution

Holyrood’s Economy, Energy and Fair Work Committee has published a report on protected trust deeds citing that changes are needed to make the debt solution more effective in supporting people who are in debt.

A protected trust deed is one of three statutory debt solutions in Scotland. It involves a debtor’s assets being managed by an insolvency practitioner for the benefit of the creditors for a four-year period. During this time, part of the debtor’s income is paid to the insolvency practitioner.

Last year around 8,000 people entered a protected trust deed, 150,000 people sought debt advice and, beyond that 600,000 adults are considered to be over-indebted in Scotland.

Amongst its calls within the report, the Committee asked for changes to the way fees are charged in protected trust deeds. The current rules can see debtors making contributions but not reducing their overall debt levels for at least the first two years.

Committee Convener Michelle Ballantyne MSP said: “Now more than ever people’s finances will be feeling the strain, and some will be contemplating seeking help to clear their debts.

“A debt solution should work in reducing that person’s debt. We heard evidence which showed that fees were being frontloaded resulting in the overall debt not lowering despite payments being made. This needs to change.

“The Committee welcomes the Scottish Government’s commitment to conduct an overarching debt review. However, it is incredibly important that the Scottish Government listen to the Committees recommendations to ensure that protected trust deeds act as an effective debt solution and debtors are safeguarded from the potential harm that can be caused when things go wrong.”

The Committee also heard evidence that online advertising and social media campaigns can target people in debt, offering a solution which is not always suitable for their circumstances.

Michelle Ballantyne MSP added: “People in debt must receive the right help and advice and not choose a solution based purely on what they saw on social media that day.

“The Committee recommends tighter regulations on online advertising and believes that free independent money advice would help ensure that people make the decision right for them.”

There are three statutory debt solutions in Scotland:

Bankruptcy – All of the debtor’s assets are managed by a trustee for the benefit of creditors for a four-year period. Contributions from income will also be required, where appropriate. Almost all outstanding debts are written off at the end of the four-year period, allowing the debtor to become debt free.

Debt Payment Programme under the Debt Arrangement Scheme – Debtors make payments over an extended period of time to pay off their debts. It can last for any “reasonable” time period, but the average is around seven years. Debts are not written off, so the scheme is only available to those who can repay in full over the length of the scheme.

Protected Trust Deed – As with bankruptcy, a debtor’s assets are managed by a trustee for the benefit of creditors for a four-year period. Contributions from income will have to be sufficient to pay the trustee’s fee and provide a return to creditors. Protected Trust Deeds are seen as offering more flexibility than bankruptcy.

Informal debt solutions – Most debtors negotiate informally with their creditors to make lower repayments. These arrangements can be unstable, and do not prevent creditors from taking action to enforce their debts if they think they should be paid more.

The published report can be found here.

Are you struggling to manage debt? Free, independent advice is available. Granton Information Centre’s office on West Granton Road is currently closed to the public, but they at still here to support you.

If you have money worries, employment concerns or housing issues, or if you are claiming benefits for the first time and find it all very complicated, contact Granton Information Centre and speak to an adviser:

Telephone 0131 552 0458 or 0131 551 2459

Email info@gic.org.uk

Granton Information Centre: here to help.

Money worries? Financial support and debt advice available

29% of people in Scotland report being worried about their finances having already felt the negative impact of Coronavirus.

People in Edinburgh facing financial difficulty as a result of the Coronavirus outbreak are being encouraged to seek guidance on the help available to them.

Research commissioned by the Scottish Government in partnership with YouGov has revealed that nearly a third of people across Scotland (29%) have already felt the financial strain of the current Covid-19 outbreak and are worried about its impact.

The survey of over 1000 respondents also shows that 71% of people in Scotland are concerned about the lasting impact on their finances.

These findings follow the launch of a new campaign by the Scottish Government and the Citizens Advice network that aims to raise awareness of the financial support available to people in the Capital.

The campaign provides information and advice on issues including rent and mortgage payments, energy bills, council tax, and benefits people may be entitled to.

People throughout Edinburgh are able to access this advice online, by contacting their local Citizens Advice Bureau or getting in touch with any of the capital’s independent advice providers including Granton Information Centre and CHAI.

Cabinet Secretary for Communities and Local Government Aileen Campbell said: “There is no doubt that this is a difficult and worrying time for everyone. Today’s findings further underline the need to provide people across Scotland with the correct support, guidance and information to help them with their finances.

“We need to ensure that people are aware of the support that they are entitled to from the DWP and I would encourage everyone across Scotland who is facing financial difficulty to look into what additional help is available to them.

“That’s why we’ve been working with the Citizens Advice network in Scotland to create this central source of information – with everything from guidance on benefits, right through to what you can do if you are worried about paying your mortgage or rent.”

Adam McVey, City of Edinburgh Council Leader, said: “Work has been ramping up across Edinburgh to make sure our hardest hit citizens get the help they need. From welfare, council tax and debt support for those facing financial hardship, to food supplies for our most vulnerable families, we’ve been pooling resources to direct help to those who are in crisis.

“Our five Council Resilience Centres are providing a base for officers to work from so that they can target online and phone support for those facing hardship or worried about homelessness. And we’re building up a picture of how our most at-risk residents are impacted, so that we can develop longer-term measures through the Edinburgh Poverty Commission.

“It’s going to be so important that we work together to tackle poverty and, in these uncertain times, we know financial worries will weigh on people’s minds. Don’t suffer alone. Know that help is available and get in touch with Citizens Advice or our own Advice Shop for help.”

The Citizen’s Advice network website features dedicated COVID-19 content along with a telephone helpline. Those who have been financially impacted by the coronavirus outbreak and require free, confidential, financial support, can visit cas.org.uk or call 0800 028 1456.

Local Citizens Advice Bureaux are situated around the country. To find your local service, simply enter your postcode at cas.org.uk/bureaux
Free, professional help is also available from Granton Information Centre and Community Help & Advice Initiative (CHAI) who, along with Citizens Advice Edinburgh, deliver debt advice across the capital.
For more information, check out the city council’s advice pages on welfare support, financial worries and debt information.

Granton Information Centre: still here for you

Due to the Coronavirus outbreak our office is currently closed to the public – but  GIC is still operating!

Call us Monday – Friday, 9.30am – 4pm on on 0131 551 2459 or 0131 552 0458 if:

•You would like to arrange a telephone appointment to discuss money, benefits, housing or debt

•You wish to discuss an existing case

•You require a foodbank referral

All messages will be returned as long as you leave a clear telephone number for us to reach you on.

Emails will be checked daily: our email address is info@gic.org.uk

Sales and evictions halted during COVID-19 outbreak

Accountant in Bankruptcy (AiB) has suspended sale and eviction from property in ongoing bankruptcy administrations until further notice in response to the current COVID-19 pandemic.

New measures and greater flexibility are also being introduced by AiB – Scotland’s insolvency service – to simplify procedures to help those seeking debt relief through bankruptcy, or need more time to pay their debts through the Debt Arrangement Scheme. This action will also help alleviate the administrative burden on frontline money advisers and insolvency practitioners.

AiB deals with approximately 80% of bankruptcy cases in Scotland and it has urged other trustees to show similar leniency and flexibility.

Business Minister Jamie Hepburn welcomed the new measures, saying: “This pandemic will have severe economic consequences and we are treating it as an economic emergency, affecting everyone from the largest conglomerates to small businesses and individuals.

“The Scottish Government is working hard to respond to this and we’ve announced a £2.2 billion package of measures to support businesses.

“We’re asking banks, insurance companies and our own departments to be flexible and compassionate wherever possible, including offering mortgage holidays and extending timescales for those in persistent credit card debt.

“This will help reduce the pressure on individuals facing financial difficulties caused or made worse by the current crisis, and we are actively considering what more we can do to help.”

The full list of measures being introduced by Accountant in Bankruptcy:

  • in bankruptcy cases (where AiB is named as trustee), AiB will suspend action on division and sale and eviction from property until further notice
  • the evidential requirements for individuals seeking debt relief through bankruptcy have been amended to allow faster access, providing protection from debt enforcement
  • AiB has written to other trustees involved in the bankruptcy process requesting that similar forbearance is shown in light of the prevailing circumstances
  • the processes for AiB’s determination and audit of trustee accounts will be streamlined on an interim basis with additional detail set out in a letter to all trustees
  • electronic signatures on Protected Trust Deeds and associated documentation will be accepted, assisting continued access to the debt relief provided through this solution with a reduced requirement for face to face contact
  • AiB’s Insolvency Registrations Team will work flexibly with money advisers and clients where there are difficulties in demonstrating income and expenditure and meeting the evidence requirements associated with the debtor application process
  • AiB has asked trustees who have concerns about meeting statutory timescales for bankruptcy and Protected Trust Deeds to liaise with the appropriate AiB teams – a pragmatic approach will be taken.
  • in anticipation that the COVID-19 pandemic will exacerbate issues faced by those with fluctuating earnings, with those on zero hours contracts particularly impacted, AiB has decided not to revoke Debt Arrangement Scheme (DAS) debt payment programmes due to non-payment with a causal link to COVID-19 until further notice

Credit Card firms told to review their approach to persistent debt customers

The Financial Conduct Authority (FCA) has written to credit card firms telling them to review their approach to borrowers who are stuck in persistent debt, where they are paying more in interest, fees and charges than they are paying of their balance.

The FCA require firms to help people who have been caught in a cycle of persistent debt for three years, by proposing and agreeing plans with customers to resolve the situation.

Ahead of firms issuing letters setting out proposals to customers who have been in persistent debt for three years, and to make sure the firms’ approaches to the rules are working in the best interest of consumers, the FCA is outlining a number of areas firms need to review and ensure their approach is in line with expectations.

This includes:

  • a concern that customers may not respond to letters from their credit card provider, advising that they have been in persistent debt for three years. Firms must encourage customers to speak with them to discuss potential repayment arrangements. If customers can’t afford the options proposed by the firm, they must be treated with forbearance and due consideration, for example, by reducing, waiving or cancelling any interest or charges.
  • a concern that firms may cancel or suspend credit cards for everyone in persistent debt, including those willing to engage and come to an agreement. In these circumstances, firms are not allowed to suspend a credit card without having an objectively justifiable reason.

Jonathan Davidson, Executive Director of Supervision for Retail and Authorisations at the FCA, said: ‘Under our rules, firms must help customers to reduce the level of debt they have on their credit card more quickly.

“If a customer cannot afford the firm’s proposals for how to do this, the firm must offer forbearance, potentially including reducing, waiving or cancelling any interest, fees or charges.

‘My advice to consumers is don’t bury your head in the sand. If you can’t afford to meet the repayment schedule that the credit card firm is suggesting, don’t be afraid to tell them. If we find firms are not offering their customers the appropriate level of help, we will not hesitate to take action.

‘If the firms do this right, we estimate that this could save customers up to £1.3bn a year in lower interest charges.’

Gareth Shaw, Head of Money, Which?, said: “Millions of people across the UK are trapped in persistent debt, so it’s right that the regulator is taking steps to encourage banks to help their customers break this cycle.

“It’s crucial that the industry properly engages with all those identified as needing help and offers manageable plans that include reductions, waivers and even the cancellation of charges and interest.

“The effects of living in persistent debt can be devastating, so it’s important that those who are likely to be impacted by the new rules take notice of how these new measures could affect their finances.”

Consumers concerned about persistent credit card debt and/or multiple credit cards they are dealing with, can get free debt advice from a range of support organisations including Granton Information Centre and Money Advice Service.

“Broken economy” is driving record levels of household debt, warns TUC

Low pay, insecure work and austerity are feeding a growing debt crisis, the TUC has warned.

New TUC analysis published today shows that:

  • Unsecured debt per household rose to £15,880 in the first quarter of 2019, up £1,160 on a year earlier.
  • Over half of households report having unsecured debt, most commonly in the form of credit card debt (60%), overdraft (28%), personal loans (25%) and car finance (25%).
  • Young people are disproportionately likely to be in debt. 70% of 18-34 year-olds report having a type of unsecured debt. This drops to 33% among people over 65.

The TUC believes that persistent low pay is the key driver of household debt. Real wages are still lower than they were before the 2008 crisis and working families are struggling to make ends meet without going into the red.

The latest analysis also shows that of those households with unsecured debt:

  • 1 in 5 say repayments are a “heavy burden on their finances”.
  • 1 in 7 (14%) have fallen more than two months behind on repayments in the last year.
  • 45% don’t feel that they have enough money set aside for emergencies.

TUC General Secretary Frances O’Grady said: “Our broken economy is forcing working families deep into debt.

“Low pay, insecure work and austerity have pushed millions of households to the financial cliff edge. Big corporations are raking in huge profits at working people’s expense. And successive governments have done nothing to avert the crisis.

“It’s time to reset the balance of power in our workplaces and our economy. Government must make more employers negotiate pay and conditions with unions. That will lift wages for everyone and stop working families having to rely on credit cards and overdrafts to get through the month.”

The TUC has published new proposals to ensure that workers get the chance to negotiate better pay and conditions through trade unions. These include:

– unions having access to workplaces to tell workers about the benefits of trade union membership, following the model in New Zealand

– new rights to make it easier for unions to gain the right to negotiate at workplace level

– new rights for unions to negotiate right across sectors, starting with hospitality and social care

The TUC is also calling for:

  • a £10 National Minimum Wage to be introduced as quickly as possible
  • a ban on zero-hours contracts, and a crack down on insecure work that means people don’t know how much they’ll earn from one week to the next