Personal debt is a growing problem across the country. Neil Hudson talks to one woman whose debt was almost too much to bear and finds out how she discovered a way out.
Until a few years ago Gemma Smith (not her real name) had a good job and enjoyed all the trappings of modern life but when her circumstances changed suddenly she found herself with bills to pay and nowhere to turn.
Getting into debt was something she had never contemplated and it happened quickly and she wasn’t prepared for the consequences. Following a staff reorganisation at her school, Gemma found herself without a job.
“It all happened at once,” said the 29-year-old from Harehills, Leeds. “I worked as a teacher in a primary school. I was hoping for another job but it didn’t happen.”
Gemma had another problem - she suffers from a rare condition called Ehlers-Danlos syndrome, which makes her joints prone to dislocation. She has learned to live with it, defying doctors who said she would never walk by using crutches, despite the fact she often suffers painful dislocations. At the time of losing her job, she was exploring the possibility of having a double hip replacement but the NHS criteria means she is too young for the operation.
With Christmas fast approaching and still no prospect of a job, she considered taking out a short term loan from a high street lender.
She paid it back. No problem.
But then she was back to square one. The second loan was a different matter.
“When I came to pay it back, I simply had no money. I rang them to explain and they seemed to understand but I fell foul of the massive interest rates these firms apply if you go beyond the repayment deadline. In some cases, I was paying £70 a day on a loan of £250. Before I knew it the amount I owed was at £1,500.”
It wasn’t the only loan.
“By that point, I’d already maxed out two credit cards worth around £2,500 and I had seven pay day loans, two for £250, two for £300 plus others at £400, £500 and £150.”
But why did she let herself get into such a situation?
“I needed to pay bills, Christmas was around the corner and I had no money for it, I wanted to be able to buy people presents, to buy food, to live. I’d gone from being in a well-paid job and being able to afford such things to having nothing at all.”
Added to that, Gemma’s benefits were suddenly cut after a review determined she could work in any job, despite her debilitating condition.
Then came another bombshell... she was pregnant.
“I had to think fast, I had seen the adverts on television about short term loans and that looked like an easy route to solve my problems - it was easy, too easy when I think back. One thing they never make obvious is the higher interest rate you pay if you go beyond their deadline.”
Then came an endless barrage of phone calls from creditors. Sometimes up to thirty a day. Many consisted of personal attacks and threats.
“At one point I was getting about 15 letters a day and around 30 phone calls. Some of them were just voice messages but they were intimidating - they would say things like, ‘If you want to avoid the embarrassment of me turning up at your door, press 1.’ If you pressed 1 then you were connected to someone who would basically belittle you. They would say things like ‘You’re an absolute embarrassment, you’re a failure and scum’. They’d call me ‘stupid’ and ‘shameless’. It would just go on like that.”
But it didn’t stop there.
“Before I knew it my parents were involved. My father is in his 70s and he was mortified, especially because they were not in a position to help me. The amount I owed was going up by the day, the threats were unrelenting, I just wanted to end it, to make the problem go away.
“That’s when I attempted to take my own life. I’d read somewhere that when a person dies, the debt dies with them. It seemed like an option.”
The next thing Gemma knew she was having her stomach pumped in hospital having taken a cocktail of prescription and other drugs.
Still, her problem had not gone away. If anything, she felt more alone than ever.
Her original debts of just over £5,000 had, in a matter of weeks, ballooned to £19,000.
“It would take me something like 25 years to repay it. It therefore became unrealistic for me, especially when they were adding £70 a day. I just didn’t know where to turn.”
Just as Gemma thought there was little hope, she spotted an advert for the debt counselling charity Step Change.
It was an epiphany.
After receiving initial advice, something called a debt relief order was issued, effectively freezing a large part of her debts for a year.
“The phone calls just about stopped, so did the letters. I still get the odd call but nothing like before. It’s allowed me to put my life back together and to get ready for giving birth in September.”
Gemma’s debt relief order was issued in April - another consequence of the order is if her financial circumstances have not improved by next April, her debts will be written off.
Still, she won’t be completely out of the woods even then. While she might possibly be free from the burden of trying to keep up with extortionate interest rates of up to 2,500 per cent, she will still be deprived of some things most people take for granted.
“I am not allowed a normal bank account,” she explained. “I could not, for example, get a contract mobile phone or any other form of credit.
“The situation now is better than it was. I couldn’t keep up with the amount of calls I was receiving. I am not proud of the situation I’m in but at the same time I do think it was too easy for me to get into debt.
“I’m getting on with my life, it’s not easy but I would never ever want to go back to where I was. I was in such a dark place.
“There was a point when I thought it would never end but Step Change were the ones who showed me there was a way out. That’s one thing I want other people who to know - they do have options.”
Gemma’s debt relief order was just one of the routes she could have taken and it is not just a way of getting out of not paying off debts - the plan is agreed only after counselling sessions during which other options are discussed, including repaying the debts.
Gemma added: “Whenever I see the adverts for those pay day loan companies on television I feel sick to my stomach. They make it look so easy but seriously, the misery and upset it causes is unbelievable. I know there will be people out there who think ‘how could you let yourself get into this situation?’ Well, it wasn’t something I planned, it happened gradually.