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Counting the cost of living

‘We’re through Covid, aren’t we? Well, getting there.’ He said, hopefully.

But it seems that everywhere you look the cost of living is going to be the next big issue we have to deal with.

This year it’s predicted that energy bills may increase by as much as 50% or more.

In April, the expected 1.25% increase in National Insurance contributions could cost the average household £600 a year more.

The office for National Statistics showed that the cost of living in the UK surged by 4.8% in the 12 months to December - the highest increase in 10 years!

And according to the Bank of England, inflation is set to peak at 6% in the spring.

The Resolution Foundation, an independent think-tank focused on improving living standards for those on low to middle incomes, has warned that real wage growth, which was flat in October, "almost certainly started falling in November and is unlikely to start growing again until the final quarter of 2022". Resolution Foundation chief executive Torsten Bell, speaking with the BBC said: "The overall picture is likely to be one of prices surging and pay packets stagnating."

There are some bits of good news as well. As reported, he also said: “that the UK employment market had shown signs of resilience during the pandemic following the end of the government's furlough scheme on 30 September, with the unemployment rate close to pre-Covid levels at 4.1%”. He highlighted that the national living wage will rise in April, by 6.6%, which he said means "the lowest earners will be protected from some of these price rises we are seeing". However, Mr Bell said that while some areas of the workforce have seen sharp wage rises - such as in-demand HGV drivers - "overall the story is prices are going up for everybody while wages go up for some".

The governments’ response has been to reduce the Universal Credit taper, as well as measures to assist with bills, including cold weather payments and a freeze in alcohol and fuel duty. But poorer families who spend more of their income on energy could be the worst hit.

At TC we’re starting to see a number of clients who are already feeling the pinch.

Thankfully, there are several solutions available that can help them, and our experienced and highly qualified money advisers are just a call away.

We meet each client, discuss their requirements, and provide them with suitable money advice to ensure that the correct solution is chosen to help them.

In Scotland, there are several excellent solutions to help deal with problem debt.

A Moratorium – can be put in place to stop creditors from taking action for six months under current emergency Covid-19 legislation.
The Debt Arrangement Scheme (DAS) - allows you to repay your debts over several years, freezing interest and charges and protecting assets.
A Trust Deed – an agreement between you and your creditors to pay back an affordable amount, usually over four years. There is an element of debt relief. Assets may be at risk.
Bankruptcy (Sequestration) – involves transferring your assets into the care of a Trustee; appointed to pay off your creditors as far as this is possible. If able, you would expect to make a contribution for four years.

One of the good things about solutions like the Debt Arrangement Scheme (DAS) is, if your circumstances change you can ask to change your payments as well.

There are a couple of ways to do this:

  • A short-term financial crisis payment break. Where money advisers can automatically process a variation to excuse a missed payment if their client has suffered a short-term crisis and cannot make their payment. As there is no requirement for a full variation application, it is an instantaneous process. Money advisers have discretion as to the “crisis” definition and must annotate the application with the reason for approving the variation. The client may have up to 2 months’ worth of crisis break variation approved in any rolling year.

  • A variation. If a debtor's circumstances change and they can no longer afford the agreed payments, or if they want to increase the level of payment, or have a break entirely, due to a drastic change in circumstances, they can apply for a variation to their DAS. This can last for up to six months.

In both cases, the term of the DAS will be extended or decreased accordingly to take account of any changes or breaks in payment.

Whatever the solution, the Debt Arrangement Scheme, Trust Deed, or Bankruptcy at TC we work with our clients to ensure that contributions are set at an affordable and sustainable level in line with government guidance. As described above, particularly in a DAS there is the flexibility to allow the plan to succeed, taking account of changes in circumstances as they happen.

TC Debt Solutions, part of Thomson Cooper, offer free, confidential, non-judgemental debt advice. If you are struggling with problem debt, please contact us, don’t suffer alone and in silence when we can help.


Ian Brown

Senior Insolvency Manager

Phone: 01383 628814

Mob: 07519 124657

Richard Gardiner


Phone: 01383 628828

Mob:    07872 376105

Maureen Walls

Senior Insolvency Manager

Phone: 01383 628812

Category: Debt Problems

About the author

Ian Brown

Ian Brown

Ian is an expert in the Debt Arrangement Scheme and Business Debt Arrangement Scheme, assisting individuals, sole traders and partnerships.

He also advises on personal debt solutions recommending the best option to resolve problem debt issues.

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