Tackling Debt
A Positive Approach
www.LTScotland.org.uk Learning and Teaching Scotland
© Learning and Teaching Scotland 2009
First published by Learning and Teaching Scotland 2009
ISBN 978-184399-174-8
Contents
Introduction
02
Part 1 About this Project
04
Part 2 Addressing the Capacities in Curriculum for Excellence
05
Part 3 Using the Case Studies
06
Wilma’s Story
08
Amanda’s Story 10
William’s Story
12
Helen’s Story
14
Dave’s Story
16
Acknowledgements 18
Glossary of Terms
19
Appendix
Financial Education and Curriculum
for Excellence: Making Connections
23
WWW.LTSCOTLAND.ORG.UK
2
Introduction
About this resource
Research and personal
experience has shown that
many people have
difficulty in managing their
money. Although some
try hard to control their
spending to match what
they can afford, others
spend quite freely with
little thought for the
consequences and can
easily get into serious debt.
Tackling Debt aims to
bring about discussion of
debt in the classroom in an
objective, non-personal
way.
TACKLING DEBT ­­– A POSITIVE APPROACH
This resource for learning and teaching is
made up of five case studies illustrating how
people have drifted into financial difficulties.
• Wilma’s story (DVD)
• Amanda’s story (Text)
• William’s story (Text)
• Helen’s story (Text)
• Dave’s story (Text)
The website www.LTScotland.org.uk/
financialeducation offers other information
and resources that the project has
generated. Learning and Teaching Scotland
would welcome contributions from teachers
and young people using the resource.
These support materials offer some
suggestions on how teachers might make
use of the case studies. We recognise that
schools and teachers will use these materials
in ways that meet the needs of young
people and the local community.
Young people engaging with the resource
will be addressing learning outcomes from
the following areas of the curriculum:
• numeracy
• literacy
• health and wellbeing
• social studies
• expressive arts.
INTRODUCTION
Teachers can use these stories in a flexible
way across a number of subject areas. Some
schools may wish to use them as part of:
• education for personal and social
development
• English
• home economics
• drama.
Scottish Centre for
Financial Education
The role of the SCFE, part of Learning and
Teaching Scotland, is to help education
authorities, schools and teachers to provide
high quality financial education to meet the
needs of all their learners. We are
committed to working with all stakeholders
to ensure young people receive their
entitlement to financial education.
Many schools have now developed ‘Money
Week’ as a ‘interdisciplinary task’ to develop
interdisciplinary elements of Curriculum
for Excellence. Tackling Debt can make an
important contribution to this. This resource
may be used in conjunction with other
resources distributed by the SCFE such as
Adding up to a Lifetime, which has been
developed for young people in S3 to S5.
Tackling Debt can also be built into
programmes of study where schools have
developed partnerships with high street
banks (such as RBS), credit unions or
organisations such as Stewart Ivory and the
Finance Education Partnership. Teachers may
also consider using this resource as a
follow-up to Small Change, a drama
resource produced in partnership with
Glasgow City Council and Bannerman High
School, which was produced for use with
young people in S1 and S2.
These materials have been produced to
support school managers, senior leadership
teams, project leaders and classroom
teachers to develop a planned, coherent
programme of financial education.
WWW.LTSCOTLAND.ORG.UK
3
4
Part 1: About this project
Tackling Debt is the result
of a partnership between
Stirling Park, the Scottish
Centre for Financial
Education, Caley Youth
Centre, Commotion Youth
Theatre and Livewire
Theatre Company. The
case studies are fictitious
but represent in broad
terms some of the problems that people encounter
in real life and the positive
approaches they take to
solve them. Teachers have
been consulted in the
production of this resource
and have made
suggestions about format
and content. We consider
them to be partners in it.
TACKLING DEBT ­­– A POSITIVE APPROACH
The aim of the project was to build on the
experience and business practice of Stirling
Park to support the financial education
of young people in Scotland’s secondary
schools. The main focus of the resource is
recognition that people do get into debt
but with effort can address the situation.
However, there is also a focus on needs,
wants, attitudes and behaviours. The
material is presented as case studies to give
the information more context and relevance
for young people.
The aim of the
project was to
build on the
experience and
business practice
of Stirling Park to
support the
financial
education of young
people in Scotland’s
secondary schools.
Part 2: Addressing the
Capacities in Curriculum
for Excellence
Education for personal
and social development is
essentially concerned with
the development of a set
of interrelated qualities and
attitudes and the skills and
understanding which are
essential if they are to be
realised. Though the focus
may vary according to age
and stage, the overarching
aims remain constant and
may be expressed as
helping pupils to become:
• successful learners
• confident individuals
• responsible citizens
• effective contributors.
The ways in which teachers and pupils
interact with each other impact on learning,
on the development of pupils’ self-esteem,
confidence and responsibility, and on the
extent to which each young person feels
valued and included.
Positive relationships are based on
encouragement, support, consistent
expectations, understanding and caring for
all pupils. This is particularly important in the
context of financial education, where young
people from different cultural, economic and
social backgrounds will have substantially
different needs and previous experiences.
Their views and perspectives must be
regarded as important. This not only
promotes a sense of belonging but also
establishes a climate where young people
are more motivated and learning is more
effective.
All education for personal and social
development programmes should be
planned using the principles of curriculum
design1.
Effective education for personal and social
development recognises that there are many
contexts in which children and young people
grow, develop and seek to make
connections. Effective schools recognise their
central role in what should be a lifelong
process.
1
www.LTScotland.org.uk/Images/building_the_curriculum_3_jms2_tcm4-489454.pdf
WWW.LTSCOTLAND.ORG.UK
5
6
Part 3: Using the Case
Studies
In this section you will find
suggestions for using the
case studies. However, it is
worth stating that most of
the ideas are transferable
and flexible. Using the case
studies will contribute to
developing the four
capacities in Curriculum for
Excellence.
Some general points about
using the case studies
It is advantageous for young people to be
able to set into context the relevance of
financial education to their personal
development and their increasing
independence and responsibility.
The information from this pack and the
discussion which it stimulates can also
support lessons which focus on family
relationships and the roles and challenges
of parenthood. It may be that the discussion
which ensues will help young people reach
a greater depth of understanding regarding
what is financially possible for their parents
and carers to achieve within the budget they
have. Otherwise, parental financial restraint,
and a lack of understanding on the part
TACKLING DEBT ­­– A POSITIVE APPROACH
of young people, can often lead to ‘pester
power’ where parents and carers are driven,
through emotional pressure from their
children, to spend money they do not have.
It is important that young people
understand the links between financial
capability and health and wellbeing.
Financial worries and uncertainty can lead to
a physical decline in health and can have
far-reaching consequences.
Suggested approaches to
using this resource
With senior students, the teacher could
show the DVD of Wilma’s story to the class,
either all the way through or scene by scene.
Students could discuss in groups, or as a
class, the elements of the story, exploring
the financial and personal problems of the
characters. Suggestions on discussion points
are given in the text. Class members could
be invited to take on one or more of the
roles in Wilma’s story and suggest
alternative responses to those featured.
Another possibility could be to ask separate
groups within the class to represent each of
the characters and to discuss and note the
impact of Wilma’s possible redundancy on
their character personally.
The four text stories could be used one at
a time or simultaneously with four groups.
Groups could be asked to feed back to the
rest of the class about the/their character,
his/her financial situation, the difficulties
using the case studies
faced, likely consequences and suggested
solutions. Listening groups could challenge
the views or ask pertinent questions.
It is likely that any approach using the stories
in this resource will provoke interesting
discussion in class and in keeping with the
principles of curriculum design 2 there could
be opportunities for further research via the
internet or out-of-school visits. Speakers
with a relevant financial background could
be invited.
2
Financial education is about real-life
situations and young people should be
encouraged to use these scenarios as
starting points from which to extend their
knowledge and understanding.
www.LTScotland.org.uk/Images/building_the_curriculum_3_jms2_tcm4-489454.pdf
WWW.LTSCOTLAND.ORG.UK
7
8
Wilma’s Story
Wilma is a single parent
with two teenage children
who unexpectedly faces
the threat of redundancy.
She has been in the habit
of using credit cards to
satisfy her own and her
children’s material whims
and living beyond her
means. Realising that
spending habits will have
TACKLING DEBT ­­– A POSITIVE APPROACH
to change radically, she
breaks the news to her
children. Initially they do
not take kindly to the idea
of the impending lifestyle
changes, but eventually
come round to the idea
and take a more
responsible attitude.
Wilma’s full story is on the DVD.
wilma’s story
Redundancy
Redundancy occurs when the
company you work for can no longer
afford to employ you as they do not
have enough business coming in.
Redundant literally means ‘not
needed’. The company that Wilma
works for has lost the big ‘Kennedy’
order and does not have anything to
replace it. If the business does not
make enough money it sometimes
cannot keep paying the people who
work there.
Credit cards
Credit cards are a useful way of paying for goods. You can use them in
shops and also when buying online
or over the phone. As they are loans,
you have to pay an amount of interest depending on the APR of the card.
Each month you must make a
minimum payment but if you only pay
this then the debt will increase as the
interest charged is usually more than
this. The credit card will have a limit
but remember this is the limit of how
much the company will lend you – you
still have to pay it all back as well as
the interest. You should only use credit if you know you have, or will have,
the money to make the repayments.
Some financial education
themes
• needs versus wants
• part-time work – possible effect on studies and future careers.
It was also suggested that the case study
could focus on:
• making ends meet – buying goods or taking debt you can afford
• being aware of the changing world around us – making decisions based on up-to-date information.
Suggested student
activities
1. Discuss:
a)
the kind of things the family
probably have at home which might have been bought using credit cards over the years
b) Amanda and Brian’s reaction to the news their mother gave them
c) some part-time jobs teenagers can get.
2. Things became difficult for Wilma. Discuss why this was the case.
3. Look for a job for Wilma on the
internet – the job should use her office skills.
4. Students could develop role play and
writing based on students’ views and the DVD.
Teachers highlighted the following themes
that could be addressed with this case study:
• redundancy
• credit cards
WWW.LTSCOTLAND.ORG.UK
9
10
Amanda’s Story
Amanda is 28 and lives
with her partner Ian in a
house they bought
together with a 25-year
mortgage. She has been
the manager of a
supermarket, earning
£30,000 a year for the last
two years. She joined the
company four years ago
after being a student at
university and then going
on a management training
scheme.
Amanda did not have any savings when she
became a student and built up debts during
her studies. Instead of concentrating on
paying them back when she started earning
her current salary, she instead built up more
debts by going on holiday, buying a new
car and buying new things for the house.
She now has debts of more than £20,000.
This is made up of a personal loan for her
car, store and credit cards and her student
loan. Like a lot of people, Amanda kept her
financial problems secret and didn’t even
tell Ian about her debts. It was only when
he saw a credit card bill by accident that he
found out the true extent of her debts and
urged her to get advice.
TACKLING DEBT ­­– A POSITIVE APPROACH
Amanda decided to see a money adviser,
who advised her that the best course of
action was through the Debt Arrangement
Scheme (DAS). An approved DAS
administrator sets up a debt payment
programme so that one regular monthly
payment is made to an approved payments
distributor who then pays the creditors.
Amanda set up a Debt Payment Programme
over three years which her creditors
agreed to.
Under the DAS, Amanda knew her home
was secure as long as she kept up her
mortgage payments. She is keeping to her
budget and making her monthly payments.
Amanda realises until she is debt clear she
cannot afford luxuries and has pledged to
save up for them in the future. Ian was
amazed and disappointed that Amanda did
not tell him how badly in debt she was,
especially as if she had defaulted on the
mortgage payments, he would have been
liable for her share.
amanda’s story
Creditor
Some financial education
themes
The business/company that has given
you credit. The people you owe
money to.
Teachers highlighted the following themes
that could be addressed with this case study:
Default on the
mortgage
Stop making the repayments on the
loan you have taken to pay for your
flat/house.
DAS
The Debt Arrangement Scheme
(DAS) was set up by the Scottish
Government. This service is often free
and it can help you organise your
payments in a managed way. This can
take away a lot of the stress of debt as
long as you stick to your agreement.
Student loan
These are organised by the Scottish
Government and repayment only starts
when you are earning over £15,000
per year. You can borrow up to £4500
depending on your family income and
circumstances. These loans are for the
full year and should cover living costs
during holidays as well as term time.
•
•
•
•
student loans
budgeting
Debt Arrangement Scheme (DAS)
personal loans.
It was also suggested that the case study
could focus on:
• planning ahead – ensuring you can meet your commitments
• being aware of the changing world around us – making decisions based on up-to-date information.
Suggested student
activities
1. Discuss:
a) why you might apply for a student loan
b) what you might spend your student loan on if you were away from home
c) why it’s a good idea to plan
spending your loan.
2. Things became more difficult for Amanda. Discuss why this was the case.
3. Explore the MoneyScotland.org.uk website – budgeting advice.
WWW.LTSCOTLAND.ORG.UK
11
12
William’s Story
William is 28 and single
and has a mortgage on
his flat. At present he is
a manager of a shop and
earns £1800 per month.
After paying income tax,
national insurance and
pension contribution his
take home pay is £1250.
He used to earn a lot more
through overtime, but
when the overtime was
stopped due to a change
of company policy, he
kept his previous lifestyle
going by using credit cards
and he ended up owing
£14,000 spread over 10
different cards. He likes to
eat out a lot with friends
and has a couple of late
nights a week. He always
has to have the latest
mobile phone and takes
TACKLING DEBT ­­– A POSITIVE APPROACH
whatever contract he is
offered in the shop. His
electricity bills were high
because he always left
things on or on standby
but didn’t really think
about it.
This situation was serious enough, but
William decided to take out a secured
consolidation loan of £15,000 after seeing an advert on television. This paid off his
credit cards and put all his debt into one
place, but he had tied his flat to the loan as
security. To keep the monthly payments as
low as possible, he took out the loan over
20 years at a monthly repayment of £125.
However, William continued to spend as he
used to and started to miss payments on his
loan as well as using his credit cards again.
Only when he looked at the small print of
his loan did he realise that because he
borrowed over 20 years at an APR of about
8 per cent that over the total time of his
loan he would actually have to pay back
over £30,000. With that and his new use of
his credit cards he realised that he had built
up a total debt of over £40,000 as well as
having to pay his mortgage.
He could not afford to keep up his
payments. He had left it too late and when
he went to get money advice he was
william’s story
advised to go bankrupt. He lost his flat and
had to start again, only this time he will not
be able to get a mortgage or a loan, or use
credit or store cards for one year.
Repossession
If you buy your house with the help of
a loan then the lender will usually
protect their interest by registering a
‘legal charge’ against your house. This
means that when the house is sold
you will first have to repay the lender
any money you have outstanding. If
you do not keep up the repayments
on the loan the lender can repossess
your property. This means they can
take over the property and sell it in
order to pay back the loan.
Secured loan
A secured loan is a loan where you
will be required to use your property
as security against the loan, so the
lender is able to balance the risk of
lending to you. If you default on the
loan your home is at risk of being
taken from you to pay the debt.
Some financial education
themes
Teachers highlighted the following themes
that could be addressed with this case study:
• types of accommodation – home
ownership (mortgages) or renting
• food costs – takeaways, ready meals, cooking at home
• utility bills – electricity, gas,
switching items off
• needs versus wants – technology, going out, clothes.
It was also suggested that the case study
could focus on:
• keeping track of finances – sticking to a budget
• shopping around for the most
appropriate financial products and services.
Suggested student
activities
1. Discuss:
a) the furniture/electrical items you might buy if you had a flat
b) the regular bills you would have to pay
c) ways of cutting down on food and fuel bills.
2.
Things gradually became more
difficult for William. Discuss ways he could have avoided becoming
bankrupt.
3.
Explore the cost of a 25-year
mortgage using bank/building society APRs for different property prices and the website Money Made Clear – useful tools – mortgage calculator.
4.
Students could be asked to consider what could happen if a country became ‘bankrupt’. In this situation young people could investigate the negative effect this could have on other countries and the level of sup
port rich countries give poor
countries.
WWW.LTSCOTLAND.ORG.UK
13
14
Helen’s Story
Helen is single and lives
with her parents.
She works in customer
services and earns £1200
a month. Although she is
only 23 years old, Helen
has run up debts of nearly
£5000 mainly with several
store cards which she uses
to buy the latest fashions.
Helen was only able to make the minimum
payments on some of her debts and as her
store cards charge a high rate of interest her
debt was increasing every month. She felt
that things, were getting out of control and,
although she had enjoyed buying things, she
now worried a lot about how she was ever
going to pay it back. It had seemed so easy
to get credit in shops – all you had to do
was fill in a form and you didn’t have to pay
for it all straight away. You even got a
discount on what you were buying that day.
She hadn’t realised that the interest rate
(called the APR or Annual Percentage Rate)
was high compared to banks and credit
cards and she now owes much more than
she has spent.
TACKLING DEBT ­­– A POSITIVE APPROACH
Helen’s cousin found out about how bad
things were at a night out together. She
told Helen it would be a good idea to get
a money adviser. She could then work out
how to pay off her debts although she realised that because of her rash spending it
would take her a long time.
Helen gets on well with her parents and
would like to keep staying with them for
now. She took her cousin’s advice and
actually got an approved money adviser
for free. She has learnt how to budget her
money and has taken on a second job so
that she can try to clear her debts more
quickly and start to save for the future.
She knows that she does not have a good
credit history so she realises that she may
be refused credit and loans until she sorts
things out.
helen’s story
APR
This is used to calculate the amount
of interest you will pay each year for
your loan. The higher the APR the
more interest you will pay. You should
always check the APR for any loan,
credit card or store card. Some are
about 10 per cent whereas others are
15 per cent or even 30 per cent. They
usually have a decimal place, so 29.9
per cent is
practically 30 per cent.
Store cards
Store cards are useful way of paying
for goods if you shop a lot at the same
store. However, a lot of people use
them when they do not have enough
money to pay for the goods. As they
are loans, you have to pay interest and
some of these cards have a high APR,
which means you can pay back a lot
more than the goods cost, especially if
you need a long time to pay. The more
store cards you have, the more of a
problem this can be. You should only
use store cards when you know you
will be able to afford to pay the money
back.
Some financial education
themes
Teachers highlighted the following themes
that could be addressed with this case study:
• store cards
• advertising
• negative aspects of debt on health and wellbeing
• money advisers – council can direct to free advisers.
It was also suggested that the case study
could focus on:
• making ends meet – buying goods or taking debt you can afford
• getting a good deal – buying what is
right for you.
Suggested student
activities
1. Discuss:
a) the kind of shops that offer store cards
b) how quickly the value of gadgets falls
c) peer pressure to have the latest thing.
2. Things became difficult for Helen.
Discuss why this was the case.
3. Find out the APR on some store cards using the internet.
4.
Students could be given the task of
writing a letter from the perspective of the ‘money adviser’ to Helen
outlining the positive actions that she should take to improve her
financial position.
WWW.LTSCOTLAND.ORG.UK
15
16
Dave’s Story
Dave and Julie are both 24
and live in a rented flat.
Dave earns £18,000 as a
mechanic and spent most
of his wages on rent and
bills, clothes and going out
and never kept to a
budget. He bought the
latest gadgets and
technology, which he put
on credit cards and always
told Julie they were much
cheaper than they were.
Dave also took out two
loans for holidays and a
car. Julie is a hairdresser
and also earns £18,000.
She keeps to a budget
every month and puts
money into a high
interest account so that
they can afford holidays
and save for a deposit for
a house in the future. She
TACKLING DEBT ­­– A POSITIVE APPROACH
always looks fashionable
but only ever buys clothes
when she can afford them
and looks for bargain buys
and sales.
Dave managed to build up debts of £20,000
to a variety of creditors and couldn’t repay
the monthly amounts he owed. Instead of
addressing the issue, Dave continued to
ignore his debts, hiding unopened letters
and bills in a drawer, and ignoring the
phone calls that he received about making
his monthly repayments. Dave did not take
action even when companies were offering
to discuss repayment plans. Julie always
thought Dave earned much more than her
because he was always buying things and
wanting to go on expensive holidays.
Dave bought a £4000 home entertainment
system from a store on credit with an
APR of 24.9 per cent over four years. The
monthly payments were £132, meaning
that in total over the four years he would
have to pay back over £6300, £2300 more
than the loan. When Dave stopped making
the monthly payments the company tried
to make contact with him but Dave did
not respond. The company then decided to
take court action and take out enforcement
(known as diligence) for payment. Dave
found his wages were arrested directly
through his employer. Dave’s employer told
him he was obliged to make regular
payments direct from Dave’s wages until his
dave’s story
debt was paid. When Dave found this out
he was shocked and embarrassed and finally
realised he had to seek proper debt advice.
Dave realised that by ignoring his debts he
had made things worse so that when he
finally did seek advice he was relieved. Dave
was shown how to handle his money and
make a budget so that he could work out
how much he could make in repayments.
Dave was set up in a Debt Payment Plan
under the Debt Agreement Scheme (DAS).
DAS has been set up by the Scottish
Government to help people who are in
serious debt.
He is now keeping up with his agreed
payments so no more enforcement action
can be taken against him. Julie was shocked
to find out the true situation but helped
Dave to work out his monthly budget and
helped him sell many of his gadgets to raise
money to pay his debts.
Diligence
Diligence against the person is a process where a balanced decision has
been taken in law about the manner in which the repayment is to be
enforced.
Some financial education
themes
Teachers highlighted the following themes
that could be addressed with this case study:
• total repayment cost of a loan
• credit agreements/hire purchase
• diligence (debt repayment
enforcement)
• credit unions in your area and their rates for savings and loans.
It was also suggested that the case study
could focus on:
• keeping track of finances – sticking to a budget
• planning ahead – ensuring you can meet your commitments.
Suggested student
activities
1. Discuss:
a) why credit companies charge you interest
b) why the law allows businesses to force people to pay their debts
Repayment total
The amount finally paid back for a
loan will depend on the amount
borrowed, the APR and the length of
time of repayment. The higher each of
these is the more money will be paid
in total to clear the debt.
c) why you should keep control of your spending.
2. Things became more difficult for Dave. Discuss why this was the case.
3.
Explore the cost of some three and five-year loans using bank/building society APRs, different amounts and the website Money Made Clear –
useful tools – loan calculator.
4. Role play the situation when Dave tells Julie about his financial
situation.
WWW.LTSCOTLAND.ORG.UK
17
18
Acknowledgements
Stirling Park
Commotion Youth Theatre
www.stirlingpark.co.uk/sp_home.asp
www.nationaltheatrescotland.com/
content/default.asp?page=s344_1
Learning and Teaching Scotland
www.LTScotland.org.uk
Caley Youth Centre
c/o Ardeer Neighbourhood Centre,
Stevenston, North Ayrshire
Contact Gordon Cowan on
01294 602027
www.youngscot.org/signposting/?a=d&s
=86&sr=185&ss=19&id=4840
TACKLING DEBT ­­– A POSITIVE APPROACH
Livewire Theatre Company
www.kilmarnockstandard.co.uk/lifestyle/
lifestyle-newskilmarnock/2009/02/06/
stewarton-theatre-company-kidsstarring-on-tv-81430-22845446/
19
Glossary of Terms
Annual Percentage Rate
(APR)
The annual percentage rate is the cost of
credit that consumers pay expressed as a
simple annual percentage. The percentage is
calculated from an equation considering the
total amount financed, other finance charges such as fees and costs paid to acquire
the loan, and the term of the loan. It is not
the same as the interest rate and is usually
higher. In mortgages, it is the interest rate
of a mortgage when taking into account
the interest, mortgage insurance, and other
costs incurred. Every firm in the business
of lending money or advancing credit is
required by law to quote the APR. The APR
is the best measure for comparing the cost
of borrowing from one lender to another.
You should always check out the true cost
of a loan by finding out the APR, which is
often likely to be higher than an advertised
rate or a rate that is only valid for a short
period of time.
bank account. The third party (for example a
bank) will be required to hand funds over to
the creditor.
Attachment
Attachment puts a monetary value on goods
held by the person in debt, for example a
car. Anything that has been ‘attached’ can
be sold at auction. The money raised is then
handed over to the person who is owed
the money. The courts must give permission
first before a person can enter a house to
‘attach’ goods.
Benefits
These are benefits paid to you by the
government and include income support,
child benefit, job seeker’s allowance,
disability benefit, housing benefit, and
council tax benefit.
Arrears
Budget
When you do not keep up the monthly
repayments on a loan or mortgage you are
considered to be in arrears.
A budget is a list of all your income and all
your expenditure.
Arrestment
This means that money or goods held by
a third party are ‘frozen’. The most common example is arrestment of funds in your
Consolidation loan
A consolidated or consolidation loan is when
a person takes out a loan or other credit
agreement in order to pay off two or more
existing debts.
WWW.LTSCOTLAND.ORG.UK
20
Council tax
Debt
Council tax is a system of local taxation
collected by local authorities. It is a tax on
domestic property. Generally, the bigger the
property is, the more tax will be charged.
Some property will be exempt from council
tax. Each local authority keeps a list of all the
domestic property in its area. This is called the
valuation list. Each property is valued at April
1991 prices and put into a valuation band.
A different amount of council tax is then
charged on each band.
Debt means any money that is owed or due
to someone else. This includes loans,
mortgages, credit card payments or money
you owe to another individual.
Credit
Credit is a contractual agreement in which a
borrower receives something of value now
and agrees to repay the lender at some later
date.
Creditors
Creditors are anyone you owe money to.
These can be individuals or companies such
as banks, credit card firms, or shops that have
store cards or catalogues.
Credit management
company
Credit management companies provide
revenue management and enforcement
services to organisations who have debt to
collect. The credit management company is
responsible for the collection and recovery
of these debts on behalf of the organisation.
These could be local authorities who have
outstanding council tax or rent debt to collect
or private companies who have outstanding
debts from debtors who have defaulted on
loans or credit agreements.
TACKLING DEBT ­­– A POSITIVE APPROACH
Debtor
A debtor is an individual who owes money to
another person or company.
Debt Arrangement Scheme
The Debt Arrangement Scheme (DAS) gives
people the help and the time to pay their
debts as long as they have some income left
after they have paid for essentials. For the
purposes of DAS, you must have more than
one debt that you want to pay off. Under
DAS, you are helped by a DAS approved
money adviser to work out your budget and
what you can afford each month to pay and
a single regular payment is made to someone
called an approved payments distributor. If
you keep to the agreed payments, your
creditors cannot carry out enforcement action
against you – such as wage arrestment.
Diligence (Enforcement)
In Scotland, there are a number of ways that
people can be enforced to pay their debts
by the courts. The most common forms of
enforcement, known as diligence, are:
arrestment; earnings arrestment; and
attachment.
glossary of terms
Earnings arrestment
This means that if you are working, the
money you owe can be taken from your
wages directly from your employer, who
makes regular payments until the sum due
is paid.
Money/Debt adviser
A person specifically trained to offer advice
both on debt and on increasing your
income. A debt or money adviser can help
you work out what your options are and,
where needed, negotiate affordable
payments and set up repayment plans with
your creditors. Debt or money advisers
work in the private, public and voluntary
sectors so you may get advice from a debt
or money adviser in a private company that
specialises in dealing with debt, or through
your council or a voluntary organisation
or charity such as Consumers Counselling
Scotland, Money Advice Scotland or Citizens
Advice Bureau.
receive in your hand or bank account is your
net income. Your gross income is how much
you have earned before anything is
deducted. For example if your salary is
£13,000 that is your gross income. After tax
and national insurance and other payments
have been deducted your monthly net
income might be around £800.
Overdraft
An overdraft is an agreed amount by which
your bank account can be overdrawn –
an amount more than you have in your
account. If you have an overdraft facility of
£200 you can spend up to £200 more than
is in your account. Generally you will be
charged a set fee for the overdraft and
interest on the amount you are overdrawn.
If you go over the agreed amount of your
overdraft you will be subject to additional
fees or charges.
Personal loan
See Unsecured loan.
Impulse buying
This is where you see something that you
want and decide to buy without giving any
consideration to needs.
Net and gross
Net means after deductions so it is the
amount of money you have after certain
items have been deducted, for example
the wage you are given after income tax,
national insurance, and any other
deductions such as payments towards a
pension scheme have been paid. Usually,
your employer makes these deductions
when you get paid so the amount you
Repossession
If you buy your house with the help of a
loan then the lender will usually protect
their interest by registering a ‘legal charge’
against your house. This means that when
the house is sold you will first have to repay
the lender any money you have outstanding.
If you do not keep up the repayments on
the loan the lender can repossess your
property. This means they can take over the
property and sell it in order to pay back the
loan.
WWW.LTSCOTLAND.ORG.UK
21
22
Secured loan
Store cards
A secured loan is a loan where you will be
required to use your property as security
against the loan, so the lender is able to
balance the risk of lending to you. If you
default on the loan your home is at risk of
repossession.
A ‘store card’ is simply a credit card issued by
a retailer. Store cards are one of the most
expensive ways of borrowing money.
However, unlike a general credit card, a store
card is a limited use card since it cannot be
used for making purchases at other shops.
Sequestration
Unsecured loan
Sequestration is the Scottish legal term for
bankruptcy. You must owe at least £1500 in
total to be made bankrupt and your
creditors must have been through the courts
to demand that you repay the debt and you
must have failed to comply. Alternatively,
a person can declare themselves bankrupt.
Sequestration begins when someone is
declared bankrupt in court. The person who
has been declared bankrupt hands over the
things they own and their financial assets
to an appointed trustee, who then sells off
whatever is not exempt to pay off the debts.
The trustee can also arrange for money to
come from wages and/or bank accounts to
pay towards the debt. During sequestration
you cannot get credit of more than £250
without telling the lender that you are an
‘undischarged bankrupt’. You cannot start up
a limited company or take part in the
day-to-day management of one. You can’t
become an MP or MSP or take part in
councils/school boards, etc. If you are a
homeowner your house may be sold. At the
end of three years (this is to be changed
to one year under current proposals going
through the Scottish Parliament 3) you will be
discharged and your debts will be cleared
permanently. Your bankruptcy will stay on
your credit files for one year.
Sometimes known as a personal loan, an
unsecured loan is a way of borrowing money
from a financial service provider such as a
bank, using your personal credit rating to
determine the loan you will be offered. With a
personal loan you can borrow up to £25,000
and will need to repay the amount borrowed
plus interest within a period that can range
from six months to 10 years.
3
Information on the Accountant in Bankruptcy (AiB) website: www.aib.gov.uk/guidance/publications/debtbankruptcy/bankruptcypostapril08/poyo
TACKLING DEBT ­­– A POSITIVE APPROACH
Appendix – Financial
Education and Curriculum
for Excellence: Making the
Connections
Financial education and the
resource Tackling Debt are
closely linked with many of
the draft experiences and
outcomes of Curriculum for
Excellence. These links are
strongest within the areas of
numeracy, expressive arts,
English and literacy, and
health and wellbeing.
the four capacities. They can be applied in
a range of contexts which will be
meaningful and relevant to the children
and young people and so offer a degree
of personalisation and choice which can
give children and young people a sense of
ownership of their learning. The
curriculum areas are therefore the
organisers for setting out the experiences
and outcomes.’
‘Experiences set expectations for the kinds
of activities which will promote learning
and development.’
Building the Curriculum 3 states:
‘The OECD noted that if a curriculum is operated as a rigid structure, the time
available for learning will be for subjects
and not students. The experiences and
outcomes are grouped under the headings
of the curriculum areas: expressive arts;
health and wellbeing; languages;
mathematics; religious and moral
education; religious education in
denominational schools; science; social
studies; and technologies. They describe
learning which has a clear purpose at
levels from ‘early’ to ‘fourth’, as set out
later in this document. They describe
stages in the acquiring of knowledge and
establishment of understanding and
support the development of skills and
attributes. They are written so that, across
the experiences and outcomes, children
and young people have opportunities to
develop the attributes and capabilities for
‘Outcomes set out what the child or young
person will be able to explain, apply or
demonstrate.’
‘All are designed to encourage a range of
effective learning and teaching
approaches.’
The overarching cover paper for the draft
experiences and outcomes contains the
following statement:
‘The draft experiences and outcomes
provide for progression and seek to convey the values, principles and purposes of
Curriculum for Excellence. They build on
the best of existing guidance while
introducing areas of change. They are
designed to express an approach to
learning that is clear to the teacher
WWW.LTSCOTLAND.ORG.UK
23
24
experiences that will enhance learning,
and outcomes that are meaningful to the
young person.
Most importantly, the draft experiences
and outcomes should have an impact on
classroom practice and learning. As a
result, practitioners should have the
opportunity to engage with young people
in purposeful and worthwhile tasks,
activities and events that contribute to
their personal development and learning.’
Financial capability
Financial capability1 is broken down into four
main components:
Financial understanding
As a result of learning experiences, young
people should be able to demonstrate an
understanding and appreciation of:
• sources of income
• the nature and role of money in
society, including foreign currency
• taxation, spending, saving and
investment
• credit and debt
• financial services/products and
advisory services
• consumer rights, responsibilities and
protection
• the impact of advertising, ICT and
the media.
Financial competence
As a result of learning experiences, young
people should be able to:
• keep financial records
1
Financial Education in Scottish Schools: A Statement of Position (1999)
TACKLING DEBT ­­– A POSITIVE APPROACH
• analyse financial information
• assess value for money
• prepare and use budgets
• make informed financial decisions.
Financial responsibility
As a result of learning experiences, young
people should be able to:
• take increasing responsibility for making decisions with respect to themselves
• analyse the potential impact of financial decisions made by others on society and the environment both locally and globally
• analyse the potential impact of their
financial decisions on other people and the environment both locally and globally.
Financial enterprise
As a result of learning experiences, young
people should be able to:
• evaluate potential risks and returns
• use financial and other resources in an
innovative and confident manner
• apply knowledge and skills creatively in a range of situations.
Furthermore, in the Financial Services
Authority’s Financial Capability: Establishing
a Baseline (2006), John Tiner, Chief
Executive, FSA (2003–7), writes in the
Foreword:
‘In a world in which individuals are
increasingly required to take responsibility
for their financial affairs, people need to
be able to manage their money well. This
report, the product of a survey of over
5300 people, assesses the ability of the UK
population to do so.
appendix
The Financial Capability Survey’s main
purpose is to establish a baseline measure
of financial capability in terms of how well
people:
•
make ends meet
•
keep track of their finances
•
plan ahead
•
choose financial products
•
stay informed about financial matters.’
Young people can improve and develop
their financial capability as defined above,
while learning through using the resource
Small Change, and teachers could give
young
people the opportunity to address the
various experiences and outcomes for
Curriculum for Excellence.
WWW.LTSCOTLAND.ORG.UK
25
26
TACKLING DEBT ­­– A POSITIVE APPROACH
NOTES
WWW.LTSCOTLAND.ORG.UK
27
28
TACKLING DEBT ­­– A POSITIVE APPROACH
The pfeg Quality Mark
shows that this resource
meets the pfeg quality
standards. At the time
of isue the resource
contains educational
benefits and accurate
financial information.
For further information
visit www.pfeg.org
Tackling Debt, a collection of case studies for use in secondary schools,
is the result of partnership working between Stirling Park, North
Ayrshire Council and the Scottish Centre for Financial Education,
which is part of Learning and Teaching Scotland. The aim of the
project is to help develop the financial capability of secondary school
pupils as part of their general education. Activities such as those
described in this resource give pupils opportunities to carry out tasks,
to develop problem solving skills, and to do this in a very creative and
enjoyable way. The idea of teaching children about money through
practical activities was welcomed by the schools involved in
developing the resource.
Developing each individual’s financial capability, from early years
through to 18, can enhance life chances and choices. It can help all
children and young people achieve the four capacities of Curriculum
for Excellence, particularly in becoming responsible citizens and
effective contributors to society and at work, with an informed sense
of their roles in the world. One of the main aims in developing the
activities in Tackling Debt was to do exactly this.
Learning and Teaching Scotland
The Optima, 58 Robertson Street,
Glasgow G2 8DU
Customer Services: 08700 100 297
enquiries@LTScotland.org.uk
www.LTScotland.org.uk