Page last updated at 01:16 GMT, Wednesday, 8 April 2009 02:16 UK

'I'm not looking for handouts'

Michelle Coletta used to run a successful lingerie boutique in Dunkeld in Perthshire, but trading dried up almost overnight when the credit crunch hit.

Ms Coletta was told she and her four children faced living in a homeless unit when her home was threatened with repossession.


Ms Coletta her family could be facing living in a homeless unit

"There are two main issues that I've had in my life. One was a building problem I had with the property which involved me in litigation for two-and-a-half-years and carried massive legal fees.

"And the other one was that my business has suffered a massive downturn because of what's been happening in the economy generally at the moment. Trading has plummeted and I'm not selling anywhere near what I was selling."

When Michelle's six-bedroom home was threatened with repossession she got in touch with her lender GE Money.

She put to them a simple solution to her problem, asking for her payments to be reduced for a year and then the arrears added to the total loan, a process known as capitalisation.

What's happening around us with the economy, with the credit crunch has affected me massively. I'm an absolute kind of, an absolute victim of the credit crunch

Michelle Coletta

But in Scotland lenders are under no obligation to negotiate. GE Money obtained a decree for possession of Michelle's home. They could have taken it at any time.

"It makes no sense for GE Money to take the keys off of me at the moment because there is massive negative equity. They're losing so much if they do that.

"I'm not looking for handouts for GE Money, I'm looking for time. I need time to turn my business around, to - just - settle my finances and get time to rebuild this and try and work my way out of this. That's what I'm hoping for.

"If they don't then my children and I are looking at very dire circumstances. I've been inquiring about local, local housing.

"I've never really been in this situation before so I don't really know where to turn but I have looked into the local authority housing and I've been told that I would be on a waiting list and it's very limited availability in the area, and the children are all at school in the area.

"We could be looking at living in a homeless unit. That's what I have been told."

Ms Coletta said she the repossession proceedings have put her under tremendous pressure.

She said: "I think I'm in shock. I think I'm actually in shock because it's happened over such a short period of time and it's been two or three different events that have been, I have had a run of very bad luck.

"What's happening around us with the economy, with the credit crunch has affected me massively. I'm an absolute victim of the credit crunch."

During the filming of BBC Scotland's Investigation programme, GE Money agreed to allow Ms Coletta's payments to be reduced for six months, and then recapitalise her arrears (add them to the total loan) after nine months.

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