David Hilferty from Money Advice Scotland says a recent BBC expose on "millionaire bankrupts" presented a distorted picture of people in debt
“Welcome to the world of bankruptcy,” declared the presenter of the BBC’s Millionaire Bankrupts Exposed as the camera panned over gated estates, luxury cars and ostentatious private registration plates.
So began the Panorama investigation which tracked three bankrupts in Scotland who had conspired to flout the conditions of Bankruptcy Restriction Orders (BROs).
The premise of the programme and the accompanying online article was that people going through bankruptcy enjoy lavish lifestyles.
Yet from our experience, it is clear that this is limited to a handful of egregious cases. While this demands closer scrutiny and enforcement, there is the risk that a one-sided depiction risks exacerbating the stigma of debt and hardens attitudes towards people in financial difficulty.
Debt is more often than not a consequence of poverty, rather than profligacy
David Hilferty
Aside from a solitary passing comment that most people in debt are genuine, the rest of the programme descended into inflammatory hyperbole with the narrator demonstrating a wearying predilection for alliteration to further sensationalise a shaky argument.
Debtors were dishonest. Creditors were led a deceitful dance. Bankrupts knew all the tricks of the trade.
At no point was the viewer offered a balanced representation of what life was like for the majority of bankruptcy applicants, allowing the age-old myths around people in debt to perpetuate.
In reality, most people going through bankruptcy in Scotland are on low incomes. 68% of individuals applying for bankruptcy have an income of less than £1500 per month. 81% of applicants live in rented accommodation.
What’s more, in most cases debt is not fuelled by reckless spending or poor financial management.
In recent years, money advisers report a surge in what we refer to as living cost debts – people who are falling behind on essential bills such as rent, council tax and fuel bills. Where consumer credit is used, it is often a safety net to meet the shock of rising prices in the context of stagnating incomes.
For the typical applicant who cannot access expensive lawyers and creative accountants, bankruptcy is rarely a course of action that is undertaken lightly.
Before a person applies for bankruptcy, a budget is completed with an approved adviser to calculate repayments to creditors. Waiting times to access advice can be lengthy as a result of sustained funding cuts to the sector.
A number of cases fall at the first hurdle because people on the lowest incomes cannot afford the initial application fee which can be a barrier to dealing with crisis debt.
The lax approach to the policing of BROs highlighted in the programme is in stark contrast to the experience of the ordinary person in debt. A person’s budget is reviewed forensically and requirements for evidence of expenditure are frequently onerous.
Indeed, advisers have shared case studies of an elderly disabled client who was challenged on the cost of incontinence pads, and a father whose public transport costs to visit his daughter fortnightly were considered excessive.
Programmes of this nature overlook the hardship of life in debt for people on low incomes, instead focusing on a few exceptional cases that better fit a sensationalist reporting style. This coverage has the effect of stigmatising people in debt in the same way that a growing number of programmes stigmatise people on social security benefits.
Debt is more often than not a consequence of poverty, rather than profligacy. To pretend otherwise does a disservice to some of the most vulnerable people in society.
David Hilferty is policy executive at Money Advice Scotland.
