In Focus Consumer Credit
‘Smaller but trickier’ debts are causing problems
New research reveals the changing nature of the debts causing the greatest difficulties to consumers
Joanna Elson Chief executive, Money Advice Trust, which runs National Debtline
People are increasingly struggling with ‘smaller but trickier’ debts on everyday household bills, according to our new figures. We expect the number of calls to National Debtline to hit 189,000 by the end of the year – the highest level in five years – with webchat and online demand also increasing. Our new report, A Decade In Debt, reveals
how the realities of debt problems have changed in the 10 years since the financial crisis – with fewer people seeking advice with credit cards, loans and overdrafts, and more calls about debts on everyday
household bills such as council tax, rent, and energy arrears. Half of callers to National Debtline are
These smaller levels of debt are proving difficult to repay due to an increase in ‘broken budgets’, where the money coming in is simply not enough to cover essential spending
now struggling to repay debt of £5,000 or less – up from just 22% in 2008. These smaller levels of debt are proving difficult to repay due to an increase in ‘broken budgets’, where the money coming in is simply not enough to cover essential spending. Nearly half of callers (48%) now have a budget deficit – up from 27% in 2009.
A shift in arrears National Debtline advisers are helping more and more people with arrears on everyday household bills, with proportionally fewer calls relating to credit-related debts such as credit cards and personal loans. Three in 10 callers now have council tax arrears – up from just 15% in 2008, with the proportion of callers with rent arrears rising from 6% to 17% and energy arrears from 9% to 14% in the same period.
Increasing demand Calls to National Debtline rose in the aftermath of the financial crisis to a peak of 305,000 calls in 2010 – and while demand fell in the first part of the current decade as the economy recovered, the number of calls has since risen every year since 2015. We are expecting a total of more than 189,000 calls by the end of 2018 – its highest level of demand in the last five years, with webchat and online demand also increasing.
Recommendations In response to these trends, we have set out recommendations for government,
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www.CCRMagazine.com October 2018
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