ONE fundamental truth behind Scotland's growing personal debt crisis is that money problems on a large scale are no respecter of occupation or income; no-one is immune.
Uncontrolled credit card spending is an obvious route to mounting debt. A change in personal circumstances – for example, redundancy or break up of a relationship – are other triggers.
As an insolvency practitioner, I'm never surprised to see a f
amily doctor walk through the door or to take a phone call from a university lecturer. We never classify any one job or profession as having more or fewer people who fall into money problems and we are experienced in dealing with people from many different professions and trades. Lawyers and teachers, plumbers and joiners, publicans and hoteliers – the list is endless.
I recently advised a healthcare professional who was raising a daughter alone after the breakdown of a relationship. Increasingly desperate, she paid all bills left at her door. There then followed five years in which she tried to deal with her debt through a debt management company, but the original amount didn't reduce when charges and interest were added.
The woman came to us and, despite a significant debt, we were able to offer advice on her options, including a trust deed, which she eventually opted for.
After paying an affordable contribution for three years, allowing for the necessary costs of raising a teenage daughter, she was discharged from the remainder of her debts. She has since bought a new home and has regained control of her life, but certainly regrets not taking independent advice sooner.
My experience is that people facing bankruptcy very often have to face up to stress or be encouraged to do so by others before they will come for advice.
The widow of an Austrian POW, who joined her husband in Scotland after the war, was sole carer of a grand-daughter with learning difficulties and had cancer herself. In her eighties and on a small pension, debts were spiralling out of control – risking the loss of her house and making her health even worse.
While the lady was in hospital her daughter was looking after the house and saw correspondence about the sums outstanding. There were substantial debts, although less than the equity in the former council house, over which the lady still had a mortgage that she had to service. No lender would advance funds to release the equity due to age and health and creditors harassed her, making things worse.
When confronted, the lady confessed her finances had been getting on top of her for years, especially since her husband died, yet she wanted to make life as normal as possible for a teenage grand-daughter. Only at this point did the daughter take control and seek advice.
A mortgage-to-rent scheme allowed the lady to remain in the house with the grand-daughter, all debts were paid off and benefits were identified. The lady's health improved and a vulnerable child was spared the trauma of repossession.
A social landlord bought the house at full value and upgraded it while a joint tenancy secured rights for the grand-daughter. There was even surplus funds available, providing a small nest egg for the future.
Such cases prove that only when tension or anger is eased will people escape from financial problems. It also shows you can be the best accountant in the world, but that's no use unless you talk sympathetically to someone across the desk.
• Graeme Smith is an insolvency partner at Henderson Loggie chartered accountants
