Homeless Charity Prepares Itself For ‘Perfect Storm’ As Debt Rockets

The latest report by Accountants in Bankruptcy (AiB) shows a 35% rise in the number of insolvencies between March and June 2011, and that Scottish citizens are taking on debt at a faster rate than the rest of their UK counterparts. But with little prospect of a sudden increase in economic growth, jobs and wages, Shelter Scotland believes it is only a matter of time before homeless figures rise.

"perfect storm brewing for a rise in homelessness"

Gordon MacRae, Head of Communications and Policy at Shelter Scotland, said: "The increase in individual bankruptcies is worrying. As Scotland begins to feel the full impact of savage cuts to jobs and housing benefits, and as more people face even greater debt, the perfect storm is brewing for a rise in homelessness.

"Shelter Scotland's research shows that 5 percent of people in Scotland - equivalent to 207,500 - have used credit cards to pay their mortgage or rent in the last year.

"This reliance on high interest options such as credit cards to pay rent or a mortgage is highly dangerous and can lead to people feeling overwhelmed by their financial struggle. It is crucial they face up to the facts and get advice sooner rather than later."

Money Advice Scotland has also seen the warning signs and is worried: ""Increases in the cost of living, people struggling to pay credit cards and loans will have a bigger impact to come on people with debt problems," said board member Christine Sinclair. "Yes we have seen some impact already, but with the big rises in utilities, gas and electricity, I think it will actually get worse before it gets better."

The rise in the number of insolvencies is being attributed in part to a greater knowledge of the Debt Arrangement Scheme - the new debt relief programme in Scotland aimed at helping people tackle their debts effectively – and Protected Trust Deeds, which have risen 51% since March and 6% since the same time last year.

A Spokesperson from Trust Deed Scotland Company, Scottish Trust Deed commented by saying;
"The increased figure for new Protected Trust Deeds is no surprise. We’re at the coal-face dealing with people’s enquiries about them every day, and there’s been a sudden increase in the number of calls we’ve received over the last few months."

"I believe charities like Shelter Scotland are spot on in their assessment of how this increase in insolvencies will cause a rise in homelessness. However, I also think that other charities will see an increase in their caseloads too, if they haven’t already. For example, charities that deal with health issues like depression, heart problems and ME are likely to have an increase in calls because of the physical problems that debt can cause through stress. I would also expect to see marriage counseling charities such as Relationships Scotland – Relates’ sister charity - experiencing a sudden increase in caseload too."