Recession puts debt advice agencies under strain

07/09/2009

The effects of the credit crunch have set in for debt agencies, as an influx of people in uncertain financial situations have had to face facts and seek debt solutions.

According to the Financial Services Authority, advice agencies have seen a "tidal wave" of cases following the credit crunch.

And it's no wonder – the Bank of England says collectively, we owe around £233bn as a nation on loans, credit cards and overdrafts.

Debt problems are beginning to reach people who have never experienced them before according to financial management site EuroDebt.

Its Director Kevin Still says the site has seen an overwhelming increase of over 100 per cent of the number of homeowners starting Debt Management Plan'>Debt Management Plans. Many of their clients are new, reflecting a nationwide trend of people seeking help for the first time.

A loss in income due to lower disposable incomes is cited as the main reason for financial problems, according to EuroDebt. Reduced working hours, pay cuts and rising household costs are given as the causes of ever-tightening budgets.

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