A major new report by Citizens Advice Scotland (CAS) reveals that the numbers - and levels - of personal debt among CAB clients has more than doubled over the last 5 years.
The detailed report, which analyses figures from real debt cases brought to CAB staff across Scotland, reveals a picture of rapidly mounting debt against a background of increasingly aggressive recovery tactics from lenders. The result is desperation among clients - some of whom are even going without food or heating in order to pay off their debts. Motions are due to be be tabled today (Wednesday) at Holyrood and Westminster, urging action to address the crisis.
Among the report's findings is the shock news that:
- One in ten of the CABs' debt clients had debts of more than £50,000, with the amounts owed ranging between £100 and £239,346 (and this excludes mortgage debts!)
- For every £1 of monthly income, these clients owed on average around £28 of debt. The ratio of debt to monthly income has risen by a quarter since 2003.
- Creditors were pursuing debts more vigorously than in 2003 - with two-fifths reporting instances of aggressive harrassment.
- Almost twice as many debt clients in 2008 had been threatened with unlawful debt recovery methods. The vast majority had charges and fees added to their debts due to their failure to pay on time.
- Two in five clients – including half of all women – were going without essentials as a way of managing their debts, compared with one third five years ago.
- Nine in every ten clients said debt had a negative impact on their health. Almost all said debt had affected their mental health, and a third their physical health.
Releasing the report today, CAS Chief Executive Kaliani Lyle said:
"The recession has hit people badly, making things even worse for those on low incomes, and plunging many others into financial hardship for the first time. The result is that debt has become a sad reality for too many Scots.
"But this report shows that the levels of that debt are getting out of control. Debt breeds debt. People take out a loan or new credit card because they can't make ends meet. Then they fall behind with their repayments, so they take out another loan to pay the first one off. Then they find they have to take another loan again, and before long they are spiralling into massive debts that they just can't control.
"The news that lenders are becoming more aggressive in pursuing late payment is very worrying, and it is tragic to see people say that they are suffering ill health as a result, and that they are even foregoing meals or switching off their heating to save money. These are real people, living in every single community in Scotland.
"But taking out further loans is rarely the answer. Anyone who is concerned about their finances should seek advice immediately. There is a Citizens Advice Bureau in every community - just check your local phonebook - and we offer free, independent and impartial advice to anyone who needs it.
"And of course, on a more political level, something needs to be done about this, because we don't want to publish another report in 5 years time showing that the debt has doubled again. We are urging governments in both London and Edinburgh to take steps to address this crisis. The simple truth is that too many Scots are drowning in debt. And the time for action is now."
Officials from CAS are available for interview - as are CAB Managers all round the country.
To arrange an interview or get more information, contact Tony Hutson, CAS Press Officer on 0131 550 1010 or 07774 751655.