30th April '08 - UK Debt Problem Increases as Many Fail to Seek Advice
The number of Britons seeking debt help is increasing following the aftermath of Christmas, which is causing many to consider bankruptcy.
Debt charities have said that they have seen almost twice the amount of people seeking debt help since January last year.
More people have already decided to declare themselves bankrupt or have gone ahead with a petition for bankruptcy this financial year than in the whole of 2007.
The Citizen’s Advice Bureau (CAB) said that over the last few years it has seen the number of clients in debt increase significantly as people find their incomes drop or fail to rise with inflation.
The CAB said that while there is a lot of pressure on the household budget, people are managing to pay their rent or their mortgage, and put petrol in the car but they are leaving things like council tax and other mundane bills such as water and electricity.
The main concern of the CAB is that people who see their debts spiraling out of control could turn to loan sharks.
Loan sharks prey on the most vulnerable families, offering them the money they desperately need in the short-term before hounding them for sky-high interest rates.
Government research shows that around 165,000 households in the UK use illegal lenders. The North East, North West and Scotland have been identified as a loan-shark hotspots, where the number of people turning to the sharks is disproportionate compared to the overall population.
Illegal lenders regularly target people living in deprived areas, offering them a number of small loans to make ends meet and then piling on the pressure to get the cash back.
According to the Competition Commission (CC), loans sharks charge up to 1,000 per cent interest per year for loans. The average is said to be 177 per cent per year as around two million Britons fall prey to these sharks.
Many are those on the lowest incomes and with household budgets stretched to the limit.
UK household debt is rising at a faster rate than in the US and most major European countries and is well and truly into the billions.
One major problem of debt is that many people choose to ignore it, waiting for more than a year to do something about it or seek advice. By then, they can find themselves in a far worse position and find it difficult to negotiate with creditors.
Debt counselors are advising people to seek help early, prioritise their debts and not to take out more credit to pay off existing debts.
The CAB has advised that people especially be careful around Christmas to prevent them starting the first few months of the new year paying it off and winding up with the ‘new year blues’.
The less obsessed Britain is with debt, the better our financial health in general and while most will find it completely normal or expect to find themselves in some amount of debt during their lives, they should always seek to control these debts and pay them off before acquiring more.
It is important that if you are having problems with debt you should seek help early and the advice of debt counselors. Prepare a budget to see what you can afford, prioritise your debts and do not borrow more money in order to meet existing repayments or pay off existing debts and always be fully aware of your financial situation, severe or not.
The author of this debt help article is Mike Magners.
This article does not represent ‘financial advice’ as the individual requirements of each person will be unique to their own specific needs. If there is something in the article which you would like to rely on, please ensure you check those details with the person or business with whom you arrange a financial service.The views in this article represent those of the author and not those of Netbasic Limited.
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