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A Triple Financial Whammy Set To Explode Financial Problems In 2012 Scotland Debt Solutions Company Scottishtrustdeed.co.uk

2011 will be one of the rockiest yet for families in financial trouble thanks to a triple whammy of soaring cost of living rises, the VAT increase and predicted interest rate hikes, says Trust Deed Company Simple Financial Solutions.

 

The VAT rise from 17.5% to 20% kicked in on January 4th, hitting hard those families with low income or on benefits alone. Anyone just making their debt repayments will also likely feel the pinch as their creditors up the VAT on services, as will anyone with a Protected Trust Deed who is committed to a fixed repayment scheme. The VAT rise is being dubbed “a collective financial headache” in many circles as it is forecast to cost the public purse nearly £6 billion a year.
To add insult to injury, the soaring cost of necessities will hit many poorer families hard. Gas and petrol have already increased, the latter due in part to the VAT rise, while failing wheat crops in 2010 has seen many basic foods like bread, flour and pasta leap in price with more increases inevitable as the cost of animal feed increases making meat more expensive.

 

Finally, the Bank of England has warned that at some point later on in 2011 – possible around September or October time – the first of a series of interest rates rises will occur because inflation has not reduced from 3.2% to the 1.5% level expected.

 

All this points one way – additional financial stress and an increase in poverty and sequestrations, and there have already been worrying signs of financial problems.

 

“One classic sign of financial problems is the rising use of payday loans, doorstep lenders and pawnbrokers,” says David Baddeley, Managing Director of Simple Financial Solutions. “Business for these companies has been rising steadily over the last few months or so, no doubt effect from Christmas. This is worrying, as these lenders charge extortionate rates of interest which are likely to push people further into debt and magnify the problems they are experiencing.”

 

“2010 was a bad year for many with increasing unemployment across the board, and this is set to continue if future public sector job losses occur as predicted. Wages have been stagnant and even dropped as companies struggle to find ways to stay in business. When you add to this the rising cost of food, petrol, utilities and possible interest rate rises later on this year, you can almost guarantee the number of working families that will drop below the poverty line will rise in 2011.”

 

There are currently 2.1 million working families living below the poverty line and this is likely to hit 3.1 million in 2014 according the Institute of fiscal studies. Traditional sourcing of lending are still off limits to many borrowers, some of whom have turned to loan sharks and cash converter style stores to make ends meet. So worrying is this turn events that over 200 MPs are supporting a call for a cap to be placed on lenders that charge high interest rates to try to stop the problem escalating.

 

This could be too little too late, as credit card bills are due to drop onto doormats from the 17th of January, the day labeled by the media as “the most depressing day of the year.

 

“From around the end of the second week in January our phones start to ring off the hook as people open their credit card bills and hit crunch time,” says David. “All the glitter and tinsel of Christmas mask the underlying financial problems and we all endeavour to be cheerful and have a good time. We may feel pangs of regret or guilt as we pay for Christmas on a card and resolve to deal with the problem when the bill comes in. But when that bill lands with a thud on the floor, there’s nowhere to hide and the glow of Christmas has worn off.”


But it’s not all bad news.

 

“January is a time of fresh starts and good resolutions and there’s no better time to resolve to get out of debt as quickly as possible. There’s lots of help and advice out there, and plenty of financial solutions to help you get your life back, including debt management plans and Trust Deeds, so you and your family can look forward to a future free from debt and worry,” concluded the spokesperson.

 

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