Worrying numbers seeking support for "negative budgets"

More than half of households contacting The Salvation Army’s free Debt Advice Service last year in Scotland were already living with “negative budgets” where their income no longer covers basic living costs.

New research from The Salvation Army ahead of Debt Awareness Week (16-22 March) reveals that 59 per cent of people contacting the church and charity's Debt Advice Service were unable to meet basic living expenses when they first sought help. The findings show that once priority bills such as council tax are missed arrears can escalate through charges and enforcement. In addition, easy access to credit, including buy-now-pay-later, can temporarily mask financial strain while increasing debt.

The Salvation Army’s free Debt Advice Service in Scotland last year helped cancel more than £1.2million worth of debt for around 300 clients. The service has also helped hundreds more move forward with manageable repayments totalling almost £3million. 

Emilio De Abreu Faria leads The Salvation Army’s network of debt advisers across Scotland(2) and says persistent debt can strip people of dignity and leave some feeling hopeless.

Emilio said: “Negative budgets are becoming much more common, when people cannot make ends meet and cover basic living costs. This situation is not always a result of families overspending. Cost-of-living pressures are increasing and one financial shock, such as bereavement or major repairs to an essential vehicle, can be the beginning of a spiral of unmanageable debt.

“Small instalments stacked up with buy-now-pay-later firms can soon swamp people already under financial pressure and many are unaware of the importance of addressing priority debts such as council tax and rent before tackling consumer spending. It is important to seek help quickly before debt becomes unmanageable.”

When Sam Smeaton’s husband Alan was diagnosed with terminal brain cancer her life changed overnight. Sam was travelling constantly between hospitals, managing care and trying to cope with the shock of his diagnosis. Sam relied on credit cards and an overdraft to cover travel, bills and essentials during the four months that her husband was ill before he sadly died. Her debt grew to £20,000.

After attempting to take her own life Sam was referred to The Salvation Army’s free Debt Advice Service by her GP. Working with advisers to stabilise her finances and challenge unaffordable arrangements she is now debt free, rebuilding confidence and focusing on her health – something she says would not have been possible without the support of The Salvation Army.

“Alan’s diagnosis hit us like a ton of bricks,” Sam recalls. “I wasn’t thinking about money. I was just thinking about the person I loved. Every day was survival. I wasn’t eating properly or sleeping and not thinking clearly. When you have mental health issues, even printing a bank statement can feel overwhelming.”  

The Salvation Army helped Sam access additional financial support she had been missing out on and identified a more appropriate debt solution. Within weeks, her situation stabilised.

“Emilio didn’t rush me,” added Sam. “He went through things slowly and explained everything. There was no judgement. For the first time in years, I can focus on my health. I’m not living in constant fear of the phone ringing. Anyone can find themselves here because of bereavement, illness, job loss. It only takes a crisis and once you’re in it, it spirals.”

Emilio added: “I urge anyone who is struggling to please get in touch with The Salvation Army Debt Advice Service as early as possible. Our advisers are based around the country. There is no need for people to feel embarrassed as this is a very common situation. We can help restore dignity in place of despair and the first step is reaching out for help.”

The Negative Budgets Project combined frontline insight from The Salvation Army’s debt advisers with in-depth interviews involving people using the service. It also highlighted the emotional toll of debt, with shame, anxiety and deteriorating mental health frequently delaying people from seeking help until crisis point. The research also shows that negative budgets are not isolated emergencies but an increasing feature of financial hardship, affecting people in work, people on benefits, renters, homeowners and families.

For more information or to arrange an initial discussion, find your nearest contact for The Salvation Army Debt Advice Service on their website: https://www.salvationarmy.org.uk/budget-and-debt-advice/debt-advice