Debt advice 'should be sought'

04/08/2009

People with debt problems should seek professional advice before the situation gets out of hand, the Money Advice Trust (MAT) has recommended.

The charity said that it is "vital" to turn to debt specialists sooner rather than later to avoid a worsening of debt.

Total personal debt levels across the UK stood at £1,458 billion at the end of June, according to figures from Credit Action.

The average unsecured debt in the UK is £21,480 based on households who actually have some form of credit, like a personal loan or credit card. This approximately equal to the average annual household income.

Beccy Wilks, a spokeswoman for MAT, said: "If you are worried you might be getting into difficulty and you feel a drop in income might be on the horizon or are anticipating problems coming up, it is vital you get help earlier rather than later.

"When getting debt advice you need to know about everything including the pros and cons and you need to get complete information on how all options of debt handling are going to affect you."

Kevin Still, EuroDebt director, added: "A couple with two children need to earn £27,600 a year before tax in 2009 in order to afford a basic but acceptable standard of living. The cost of a minimum household budget has risen by over 5 per cent for most families, which is well above inflation rate.

"People on lower incomes spend a greater portion of their available budget on food, domestic fuel and public transport, where prices have risen upwards of 12 per cent. The reality is that many people are now faced with pay freezes or reduced hours and this is putting more pressure on disposable income.

"If the household has over £21,000 of debt then they are likely to have minimum monthly contractual commitment to pay two to three per cent of the debt balance, which equates to between £420 and £630 per month from disposable income. This is one of the reasons why many households are really struggling and often pay unsecured creditors ahead of priority payments, like the mortgage, rent, council tax and utilities.

"In the last 18 months the average level of unsecured debt for a client joining a EuroDebt Debt Management Plan has risen to £29,000 with approximately eight credit agreements. We would strongly recommend to anyone that is struggling with their financial commitments not to borrow more and to take professional advice."

Tags; Housing Debt and Bills,

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