New research published by Money Advice Trust in conjunction with YouGov* finds that 20% of the UK population, an estimated 10.2m people, worry that their post-pandemic finances will not recover from the impact of the Coronavirus pandemic.
The research highlighted that a further estimated 6.2m UK adults have used credit to pay for essentials such as utility bills, food shopping and paying their council tax.
Worryingly, 2.3m have taken out high-cost credit to meet basic costs, meaning that a higher number of people are likely to already be experiencing problem debt issues as a result of lending during the pandemic.
17% of UK adults have been losing sleep over their finances, rising sharply to 43% where the individual is unemployed.
25% said that their mental health has been affected. The issues of Debt and mental health have a long-established connection with one another, even before the start of lockdown restrictions.
The number of people who ended up in financial difficulties changed from an estimated 14% in May 2020, to 20% in December 2020 showing a significant increase in a short period of time.
Redundancy and furlough were widely cited as the most significant reason, with an income shock such as reduced hours also being reported as a significant contribution to the cause of financial difficulties.
Money Advice Trust is a UK charity advice service that provides data to inform a wide range of organisations, such as the Bank of England, on what the latest trends in the debt and credit sectors are. Their research programme also provides useful stats on debt and credit. Recognisable as National Debtline and Business Debtline which together help thousands of people in the UK every year with unaffordable personal debts and small business debts.
The findings are part of a new report ‘The Cost of Covid‘ which outlines the experiences of people whose finances have been most impacted by the Coronavirus pandemic.
Post-Pandemic Finances – Payment Breaks Support
The Financial Conduct Authority (FCA) has said that borrowers facing difficulties will continue to receive ‘fair and appropriate support’ after a deadline to apply for a Coronavirus related payment holiday ends on March 31.
However, the FCA also said that they will be monitoring ‘tailored support’ with some lenders’ showing teething problems in implementing tailored support due to what it describes as ‘staff lacking experience’.
Further FCA Guidance into Tailored Support was released in January 2021.
Post-Pandemic Finances – Impact on the Self Employed
The Cost of Covid report highlights the problems affecting self-employed people in the UK also.
More specifically, not everyone has been eligible for the payments, which excluded owner/directors of limited companies, those who did not make the majority of their from self-employment, those with trading profits over £50,000 and until the March budget – newly self-employed people.
Money Advice Trust quotes the UK government’s own figures that show in November, approximately 1.6m self-employed individuals had been excluded due to the eligibility criteria.
However, they were keen to stress that some of these people will now be eligible due to the changes in the March 2021 budget.
Help with problem debt in Scotland
Earlier this year, the Money Charity also published a report highlighting that a Post-Pandemic financial recovery plan will be required and sitting alongside the Scottish Government’s lifting of lockdown restrictions, and return to normality, Trust Deed Scotland look to offer those with unaffordable debts with a road map to life after debt.
Becoming debt free is a journey, no matter what stage you’re at with your debts, there is help available for you.
A recent theme around the recent Debt Awareness Week event sought to address the fears and concerns that a person with problem debt in Scotland may be experiencing. One of the main focuses was to empower those in such a position to seek help and overcome those fears.
For example, many people with unaffordable debt put off asking for help through fear of being judged, or that they feel embarrassed or ashamed about their situation.
It’s important to understand that if you are feeling this way, that you know that you’re not alone.
Having helped over 25,000 people in Scotland, and with over 3,000 Trustpilot reviews, we can proudly promise you that our experienced debt advisors are friendly, non-judgemental and that any information that you choose to share with us will be treated with the strictest confidence.
Whether you just need some advice or you are choosing to commit to a formal debt solution, we’ll be with you every step of the way of your debt free journey.
Our commitment to the quality of service we provide remains our top priority throughout, from the start of your journey to the end.
Everything we do is in-house – From initial advice, setup, customer service and managing your debt solution until you are debt free. You will never be passed to another company, or be outsourced abroad to a call centre once your solution is in place.
Earlier this year, we released information on a road map to life after debt.
If you’d like to take the first step today, call us on 0141 221 0999 or contact Trust Deed Scotland.
*The Money Advice Trust commissioned YouGov to conduct a national, online poll to examine the impact of the Covid-19 pandemic on household finances. Total sample size was 2,023 adults. The fieldwork was undertaken between 9-10 March 2021. The figures have been weighted and are representative of all GB adults (aged 18+). Where we extrapolate national figures from this data, these are calculated by the Money Advice Trust using population estimates from the Office of National Statistics which indicate that there are 51,220,471 adults in Great Britain.