Jemiel Benison on dealing with debt crisis

The final week of March is Debt Awareness Week, an initiative aimed at highlighting the problem of personal debt and urging decision-makers to take the right actions to mitigate them.

This year’s theme is one we are all too familiar with – exploring the judgement and stigma that often surrounds debt.  

The aim of the week is to challenge attitudes and help people access the support they need. But what about every other week of the year?  

We recently published some research which was designed to find out what debt really means for people living with it every day. Based on the experiences of people who have come to their local Citizens Advice Bureau (CAB) for help with multiple and complex debts, the numbers reveal a world of hard realities where climbing out of debt is much tougher than falling in.  

There are two main routes into crisis debt. First, circumstantial change due to loss of income or large increases in essential spending, and second, a person can become worn down due to months or years of low income. Drivers include losing work, health issues, caring responsibilities, abusive relationships, bereavement, divorce and taxes. Two fifths of the people our report looked at were in some form of employment, which demonstrates that work is no guarantee against poverty or debt.  

Half of the people who come to us with complex debts have no disposable income to pay them off. Most have debts of between £10,000 and £20,000, with one in five having debts above £20,000. Of the top 10 debt types associated with negative income, nine are for essentials or priority debts including rent arrears, fuel arrears and council tax.  

For the people who do have a disposable income, we found that only 49% will be able to pay back their debts in under five years. The other 51% would take more than five years, with 15% taking in excess of 20 years. At this stage, for many people the ‘ability to pay’ is a token concept. They have a disposable income in name only, summed in pennies rather than pounds and nominally payable over several decades, with some even in centuries. 

You think I’m joking? One man who came to his local CAB had a disposable income of 10p per month.  

We need structural change to address this problem. Scotland needs to fundamentally re-examine its entire approach to debt, based on a realistic assessment of peoples’ ability to re-pay the arrears they are in. This includes public sector debt. We also need to re-evaluate what a decent income should be. And that’s about getting to a Minimum Income Guarantee, which involves making very serious improvements to social security.  

If you are struggling with debt, get in touch with your local CAB, any day of the year, not just during Debt Awareness Week. Our advisers can provide advice on a range of relevant options, based on an individual’s circumstances. And remember our advice is free, impartial and confidential and can be accessed online, over the phone or in-person.  

You can also learn how to maximise and make the best of your income through our money map tool https://moneymap.scot/p | Citizens Advice Scotland or get information on dealing with debt here: https://www.citizensadvice.org.uk/scotland/debt-and-money/Advice.  

Jemiel Benison is part of the Financial Health team at Citizens Advice Scotland.

This column was first published in the Herald www.theherald.co.uk