Advice agencies "swamped" by soaring debt enquiries

07/09/2009

The recession has pushed the number of people coming to Citizens Advice with problems linked to unemployment and debt to record levels, the charity has said.

New figures show Citizens Advice Bureaux in England and Wales are dealing with around 9,300 cases related to debt problems every working day.

In the three months to the end of June 2009, the number of people contacting the charity with debt issues "shot up" by 27 per cent year-on-year.

Over the same period, enquiries about job seekers allowance doubled, cases of consumers facing problems because of redundancy increased by 74 per cent and people with worries about mortgage arrears rose by 44 per cent.

Chris Pond of the Financial Services Authority told the BBC that the "tidal wave" of people seeking advice on debt issues because of the credit crunch meant advice agencies are being "swamped".

In some cases, it can be several weeks before someone can see a debt adviser, Citizens Advice told the corporation.

To make matters worse, many of those in need of debt help have "no understanding" or experience of the benefits system, Sarah Divine of east Staffordshire Citizens Advice Bureau said.

"When they find out that Job Seeker's Allowance is £64.30 a week, they're shocked," she commented.

According to the latest statistics from Credit Action, the average household unsecured debt in the UK for people using credit stands at £21,457.

During July, the charity said one person was declared bankrupt or insolvent every 3.97 minutes.

EuroDebt director Kevin Still said: "EuroDebt has seen a significant rise of over 100 per cent in the number of homeowners starting Debt Management Plans and IVAs during the course of the recession.

"Many of these clients have never sought debt advice before and when they had made the decision to take action wanted to see someone within a matter of days.

"Many of these people have been used to paying for advice and meeting people on their terms. It is true that the majority of people we see have had at least one change in circumstance, but it is more often 'loss of income' rather than redundancy that is the reason cited on their Client Financial Planner.

"Many households have been faced with reductions in disposable income through reduced working hours, pay cuts or rising essential expenditure, like fuel and insurances. Many sole traders are being paid slower and have had overdraft facilities restricted by their business bank.

"A delay in taking advice can be very costly, especially if people have been in denial for some time and have used expensive forms of credit to make ends meet.

"EuroDebt's debt solution model is based upon no further borrowing and a no obligation face-to-face meeting within two working days of contact.

"Maximising income can be as important as establishing a realistic monthly budget for key expenditure. EuroDebt's average level of unsecured debt per client in the last 12 months has been over £29,000 with eight creditors."

Tags; Income Worries and Debt, Young Family Finances, Credit Card Lifestyle,

Regional Debt Advice; Debt Help Staffordshire, Debt Advice Stafford,

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