Debt a reality for growing numbers of us

by charles Monday 19 May, 2008

The words debt and credit crunch are becoming more common these days; but just how widespread is the debt problem?

Pretty widespread by the sounds of it, especially when a leading debt advice charity says it is being overwhelmed by demands for help even in some of the richest parts of the country!

Transact, said demand for debt advice was rising across the country, but the increase was dramatic in middle-class areas. It said some advice centres were so busy they had been turning people away.

At the Mid-Sussex Debt Advice Centre, which serves the Haywards Heath area, the average debt of clients (excluding mortgages) is £20,000, rising to £110,000 in the most extreme cases.

Emma Russell, a debt adviser, said: "I've had at least two clients tell me that they would have killed themselves if they hadn't found out that we were here."

Transact says government funding has been generous, with an extra £55 million over the past three years to fund an extra 500 debt advisers. But it says this has been concentrated on inner-city areas where the rise in problem debt has been less severe.

Jamie Elliott, of Transact, said:

"In the past it was almost uniquely people on benefits, people in social housing, who went to debt advice agencies. Since the credit crunch started they are seeing a big increase in professional people and homeowners coming to seek help, who have just been pushed over the edge and now can't cope with their outgoings."
"These services now with the credit crunch are being overwhelmed by a whole new breed of debtor: middle-class people. But what that means is there is much less debt advice to go round."
Many of you seeking help from debt advisers have already used the credit in your homes to pay for home improvements but, as your fixed-rate mortgage came to an end and the cost of living having gone up, many of you have been finding it hard to meet your repayments, even if you earn a relatively good salary.

 

Transact said that it expects the problem to become worse, and has called for more funding to provide debt advice.

Debt advisers say banks and building societies must take some responsibility for encouraging debt and the government should do more to educate people about financial responsibility. But they also say a large part of the blame also rests with those of you who have borrowed so much.

If you are struggling with your finances then do not panic. You can seek advice and support from these organisations:

Consumer Credit Counselling Service

National Debtline

Citizen's Advice Bureau

Samaritans

You should also speak free of charge to a debt adviser who can provide you with advice and solutions to help you resolve your debt and credit problems.

Are you struggling with debt? Have you been pushed financially to the edge?

What will you do about it? Why not let us know in the comments?

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Categories for this post: Debt

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Comments

Brain says:

Monday 19 May, 2008 / 16:05

I heard an alaraming statistic that in the last 10 years that amount that we spend on overseas holidays has risen by 65% the fastest area of personal spending growth.

While I do think that the banks and building societies do need to take some responisibilty for the encouragement to lend, but at the end of the day, if you can't afford it now, don't borrow, save a buy it later.

While I admit some financial situations are not this simiple, an alarming number are. We tend to live in a society, where it is all about keeping up with the Beckhams, we spend money to fit in, to feel bette rabout ourselves, and then blame someone else when it all goes wrong!

Angela says:

Wednesday 21 May, 2008 / 10:05

Debt is okay as long as it is manageable. As a Debt Caseworker for a large charity I have come to realise that may clients do not understand interest rates or APR and this is half the problem. For example-a client who recently signed up for a secured loan had no idea her rate of payment would change constantly-she believed the repayment amount would remain the same throughout the term of the loan.
The Credit industry needs to ensure there is transparency and fairness in all dealings and that customers understand the consequences of their application for credit.

ben says:

Wednesday 21 May, 2008 / 12:05

i have been in debt for over 10yrs and am only 28 i have two children and have tried to be at home as much as i could to see them grow but doing this meant poorly paid jobs or part time jobs and with every parent wishing to give there children everything possible out came the store cards then the credit cards then a loan i have bever been on more then 8k per annum yet was given 3 credit cards with a total of £3500 limit crazy now over the yaers i have worked to pay interest so lesson learnt but i very hard one the worst thing is i am on such a small wage i cant consilidate my debt because i dont earn enough if all goes to plan i should be debt free on july 2009 but i am getting married in august so no doubt i will be back to square one as i have never been able to afford to save! people raed this and take note the buzz of spending is great but the comedown last a hell of a long time

Janice Smith says:

Wednesday 21 May, 2008 / 14:05

I ended up with serious debt problems just trying to make ends meet & feed my family. I dont drink, gamble, play bingo or smoke but am on benefit I went to the CCCS as I could not believe how much I owed they helped me sort out a plan & most of my debtors agreed not to add any more interest but some still are. why can people working get debts squashed after 5 years & I cant surely what applies to one should apply to others as well

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