'My year of debt torment'

By Julian Knight
Personal finance reporter, BBC News

Sayara reflects on a year dealing with debt

Last year, Sayara Beg kept a diary for the BBC of her struggle with debt.

For BBC debt day, Sayara looks back on her year of turmoil and the lessons she has learned.

"2006 was my annus horribilis.

"I lost my father and my financial independence," Sayara said looking back on a year when her debt diary shot her to public prominence.

"Up until then, I had always tried to have it all - a career, a family and my own business. Many women within my own community have none of these things. The attitude is still that women are meant to stay at home."

Sayara's problems started when her work contract was terminated after she told her boss that she had become pregnant - she is currently fighting an industrial tribunal case.

Before this, she had borrowed big to fund her and her husband's restaurant business, now in liquidation.

She had taken out business loans and re-mortgaged buy-to-let property to fund the business, but with the sudden termination of her IT consultancy contract, she was left high and dry.

Sayara's Debt Diary Debt diary: entries 1, 2 and 3 Debt diary: entries 4 and 5 Debt diary entries: 6, 7 and 8 Debt diary entries 9 and 10 Debt diary entries 11,12 and 13 Debt diary entries 14 and 15 Debt diary entries 16, 17 and 18 Debt diary entries 19 and 20 Debt diary entries 21, 22 and 23 Debt diary entries 24 and 25

"I was overcommitted, but anyone who starts a business knows that in the first five years of being in business, that is the way things go. What is the alternative, though - should you never risk anything?"

"It's not as if I was spending the money on shoes or holidays. I used it to invest in a business; before I took on that debt, the buy-to-let property was paying for itself."

Embarrassment

Ask any debt adviser and they will tell you that people who find themselves in difficulty making ends meet are hit with feelings of embarrassment and humiliation.

Sayara, an outwardly confident and articulate person, was no different.

"One of the most difficult things I found was facing up to people in my own community. I wanted to be an example and here I was in trouble," she said.

No one could make decisions and it seemed that as soon as they heard you had difficulties, they tried to scare money out of you

The reaction of her creditors was a real eye-opener for Sayara.

"As soon as I knew I would have difficulty, I contacted them to explain that I had a short-term cash flow crisis and as soon as I could work again - it was nigh-on impossible to get a new contract when heavily pregnant - payments would resume.

"In nearly all circumstances, I found I came up against a brick wall. You would talk to one person, they would agree something, and then the next time you would speak to someone else and have to start all over."

This is when Sayara started to keep her diary.

"I wanted to explore what systems lenders have in place. They always say, 'Talk to us if you're having problems' - well, I tested that.

"What I found was far worse than I was expecting.

"No one could make decisions and it seemed that as soon as they heard you had difficulties, they tried to scare money out of you rather than think, 'How can we approach this customer so that they keep their head above water and we get our money'," she said.

Sayara had invested in a restaurant which has now shut

Mixed reactions

Reader reaction to Sayara's diary was mixed, to say the least.

She had some e-mails of support, as readers became caught up in the twists and turns of her story.

In particular, people who had themselves tried to negotiate with creditors said they empathised with what Sayara was experiencing - the endless dealing with different call centres and mounting penalty charges.

However, some - including her lenders - questioned her decision to have a baby when walking such a financial tightrope.

"A lot of people bundled in having a child with a fancy car or holiday, a type of self-indulgence, rather than a necessity for society," Sayara said.

Others thought she was simply greedy, that she was getting her just deserts - another wastrel thrown to the financial wolves.

The chief lesson is that debt means a loss of independence

But disturbingly, some of the criticism struck a darker note.

"I am pretty self-reliant. Growing up, I faced racial abuse and insults. I can handle myself.

"I found it very creepy, though. There were some cruel comments after I wrote that my father had died - and then I had someone post on a message board some personal details they had found through Companies House."

Debt backdrop

Sayara's tale of being pushed deep into the red by changing circumstances is being repeated up and down the UK.

The Consumer Credit Counselling Service and Citizens Advice have both told the BBC that they have seen a surge in numbers of people asking for advice over managing debt.

If you look at the figures relating to Britain's personal debt, you can see why this is.

Collectively, UK consumers owe about £1.25 trillion.

In longhand, this is £1,250,000,000,000, equivalent to all but a few countries' gross domestic product.

What is more, insolvencies and house repossessions are rising sharply, even with interest rates at a historically low level.

Over the next few years, it is a racing certainty that more and more consumers like Sayara are going to have to explain to their lenders why they can not make their debt repayments.

CONCERNED ABOUT DEBT? National Debtline: A free, confidential and independent service funded by the Department of Trade and Industry and the credit industry. Tel: [phone] Business Debtline: Provides a free telephone debt counselling service for self-employed and small businesses, partly funded by banks. Tel: [phone] Consumer Credit Counselling Service: Funded entirely by the credit industry, the service offers advice to people in debt. Tel: [phone] Citizens Advice: Offers free, independent and confidential advice from more than 700 locations throughout the UK. Take our debt test The UK's debt footprint

Even keel

Sayara says she now feels that she is on an even keel.

She returned to work two weeks after her baby was born, so money is now coming in.

The arrears built up in 2006 are nearly paid off.

But it will not take much to push her back into the danger zone, particularly now the restaurant business - the root of her financial over-extension - is in liquidation.

Not forgetting that her credit rating has been shot to pieces.

"I face having this debt hang over me for the next decade.

"The chief lesson is that debt means a loss of independence. It is necessary to borrow if you want to invest, but if things go wrong, then you are very much on your own.

"As things stand, I can't take time out of work to be with my child or to have another baby.

"I am in a quandary. Should I ever take financial risk again, with the chances that I may suffer a change of circumstances that my average male counterpart would not?"

Millions of Britons may feel that their life options are curtailed by debt.