A new report has revealed that six in ten Scots are worried about being able to afford their household bills as a result of the cost-of-living crisis.
Two thirds of people in Scotland have cut back on non-essential spending, with two million having to cut back on everyday essentials such as food and heating.
Citizens Advice Scotland has said that more people required food banks referrals in January 2023 than ever before.
Millions of food parcels were handed out last year, with almost half going to children.
The cost-of-living crisis has plunged 70% of Scottish households into fuel poverty and debt, but help is available for the millions who are struggling.
Energy Crisis
The Office for National Statistics has revealed that, in the last 12 months, gas prices have increased by an average of 129%, taking the average household energy and gas bills to over £200 a month.
A further 20% rise in energy bills is expected in April this year.
Demand for support with energy bills has overtaken the number of people seeking help with universal credit for the first time ever and is three times higher than it was before the COVID-19 pandemic.
A household is described as being in fuel poverty when 10% or more of their income is spent on heating and other energy bills.
Many people are falling behind on payments to their energy suppliers due to the high costs, causing them to fall into debt.
Debt
A third of people in Scotland started 2023 in debt.
Advice Direct Scotland, have revealed that 17% have fallen behind with repayments in the last few months, with the most common forms of debt being energy bill arrears, council tax arrears, and credit cards.
A quarter of those owing money are in over £10,000 worth of debt.
However, the cost-of-living crisis has caused a third of households to turn to credit cards and loans to keep up with everyday costs.
A rise in debts means a rise in required repayment amounts and this cycle is pushing struggling households further into their debt.
2.3 million households in Scotland missed at least one of their January payments and over half have not yet sought any form of help.
The stigma surrounding debt is affecting those who need help.
People who have never found themselves in debt before are now struggling to keep up with the amounts that they owe.
Mortgages
Mortgage interest rates are a heavily discussed topic at the moment.
Average interest rates are expected to rise to between four and five percent, and those with fixed term contracts set to expire in the next 12 months will be expected to keep up with the rising costs.
47% of people with mortgages are worried about affording their monthly payments. This figure rises to 55% amongst those who rent.
Higher taxes and inflation are the root cause for higher interest rates, which means that the costs are set to continue rising.
Reports have found that many people who are afraid of falling behind on mortgage payments are falling into debt to avoid losing their homes.
Self-employment
The national minimum wage has been increased in an attempt to aid low-income households during the crisis.
However, those who are self-employed do not benefit from this and not everyone has the same ability to increase their charge rates.
The cut back on non-essential spending has also seen many self-employed individuals lose business and fall into financial difficulties.
The lack of job security for both zero-hours workers and those who are self-employed is adding to the debt problem millions in Scotland are facing.
The drop in income has also affected individuals’ ability to pay their income tax.
Vulnerable Groups
More than 60,000 disabled adults have fallen into debt, which has forced many to live without essential care and support.
Social care is free to adults in Scotland over the age of 65, but for those under that age, the costs are adding up.
Costs are at the discretion of local councils, and some offer free care for all ages if other criteria are met.
The average cost in Scotland is £832 a week for nursing care and £719 a week for residential care.
Councils have taken an increased amount of action on those who have fallen behind with the rising costs of their social care.
Worried about household bills and struggling with debt – What to do?
If you are worried about your household bills and you are struggling with debt – Help is available.
Our doors are always open at Trust Deed Scotland® where we offer tailored debt advice and support.
By using our Trust Deed Wizard tool, you can get in contact with us and we can help formulate a decisive plan to reduce your debts. Our advisers can change people’s lives for the better.
We can advise on several effective solutions such as a Trust Deed, the Debt Arrangement Scheme and Minimal Asset Process sequestration which can reduce and eventually stop harassment from the people you owe money to and help put you back in control of your financial situation.
We believe that with the right advice, people in debt can regain command of their finances, and feel empowered about their options, rather than fearing about enforcement agents and other debt collection practices.
If you require support, then please do not hesitate in contacting a member of our experienced debt advice team today.