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The recent increase in interest rates could have a serious effect on thousands of Scots who are already struggling with their debts, financial experts are warning.

These experts say that thousands of people in Scotland could be ‘tipped over the edge’ into bankruptcy or even serious financial difficulties because the cost of borrowing will increase.

And with one recent survey revealing that one in three Scots worry about the amount of money they currently owe means they could struggle even more.

Also, personal debt is now at its highest for five years which means even more people will find themselves struggling.

Household debt

The issue has been underlined with figures from one charity revealing that the average household debt is now £56,460 or 144% of their annual income. That is the worst that household debt has been since early 2012.

One debt expert told a newspaper in Scotland that growing numbers of people are having to borrow more because they are struggling to live on low wages.

There’s also an issue with rising prices for bills and food and those who are working in the ‘gig economy’ and cannot predict what their income will be in the coming weeks and months.

The debt expert said: “A rate rise could tip people over the edge when they are struggling already and are financially squeezed.”

Another debt adviser quoted in the newspaper was an adviser to former Prime Minister David Cameron who highlighted that despite the UK having low interest rates, credit card companies and banks are charging customers higher interest rates after their initial offer has expired.

She pointed out that the economy in Scotland cannot thrive with high levels of debt and falling numbers of people saving.

Issues over indebtedness in Scotland

The issues over indebtedness in Scotland has also been highlighted by a survey from a price comparison website which reveals that 75% of adults have unsecured debt – whether that is a bank overdraft, a personal loan or credit card and one in three Scots need them to get by every month.

Also, one in three of those questioned say they owe more money than they did last year and say the rising cost of living including bills and transport are the reasons why this is happening.

While many people with a fixed rate mortgage may not be impacted by a rate rise for several years, those struggling and need to borrow to finance their lifestyle will see the rise as being felt more acutely.

If you are struggling financially and the impact of an interest rate rise will hit hard, then it’s time to speak with an experienced debt adviser about the potential solutions that are available.

For people who live in Scotland, there are ways and means of effectively repaying debt and getting back into a healthy financial state.

Among them is the option of a trust deed which will see those struggling in Scotland repay what they owe and the amount that is left at the end being written off as unaffordable.

Potential of a debt arrangement scheme

There’s also the potential of a debt arrangement scheme which is run by the Scottish government.

Essentially, it works along the same lines as a trust deed but the entire amount that is owed debt will be repaid in full, over a longer period.

The big attraction for the trust deed and the debt arrangement scheme is that lenders will no longer be allowed to hassle you and you will enjoy some legal protection.

Debt solutions available for people living in Scotland

However, there are other debt solutions available for people living in Scotland and the debt advisers at Scotland’s Trust Deed will be able to offer help and advice that is impartial and useful.