Posted: Tue Sep 11, 2007 10:53 am
1.7 million households request help with debt
Requests for help from households overwhelmed with debts have soared by 20 per cent in the past year, figures from Citizens Advice show.
The organisation received 1.7 million different inquiries about how to deal with mounting debts in the year to April, a record. The debt caseload now makes up one third of all its work and the organisation has almost run out of trained debt advisers.
Problems with debts run up on credit card and store cards dominate, accounting for almost half of all debt inquiries. However, Citizens Advice said that there was also a sharp rise in problems over day-to-day living expenses. Inquiries on how to handle gas and electricity arrears were up by a third, while queries about council tax debt rose by a quarter.
Citizens Advice said that the surge in calls for help was evidence that the lengthy consumer boom was taking its toll. It fears that the banking credit crunch will mean even more households falling into severe debt.
The Bank of England kept interest rates on hold when it met last Thursday. However, high street banks have begun to charge higher rates of interest on the cash that they lend to one another, a result of the mortgage crisis that has hit the US. If the banks decide to pass on that cost to their own customers, debt-laden consumers will face bigger monthly repayments.
“These figures are worrying evidence that while many have enjoyed the benefits of the credit boom, a large and growing number of people continue to pay the price, becoming overwhelmed by serious debt that can have a devastating impact on their lives,” said David Harker, chief executive of Citizens Advice. He criticised credit companies for lending more cash to customers already in debt. He also urged credit companies to negotiate with customers rather than issue them threats of court proceedings.
Total debts accumulated by consumers stand at a record £1,354.6 billion, exceeding the value of the output of the entire economy which stood at £1,330 billion in mid-2007. Phillip Hammond, the Shadow Chief Secretary to the Treasury, said last night: “An economy built on borrowed money is built on borrowed time.”
Source: timesonline.co.uk
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Requests for help from households overwhelmed with debts have soared by 20 per cent in the past year, figures from Citizens Advice show.
The organisation received 1.7 million different inquiries about how to deal with mounting debts in the year to April, a record. The debt caseload now makes up one third of all its work and the organisation has almost run out of trained debt advisers.
Problems with debts run up on credit card and store cards dominate, accounting for almost half of all debt inquiries. However, Citizens Advice said that there was also a sharp rise in problems over day-to-day living expenses. Inquiries on how to handle gas and electricity arrears were up by a third, while queries about council tax debt rose by a quarter.
Citizens Advice said that the surge in calls for help was evidence that the lengthy consumer boom was taking its toll. It fears that the banking credit crunch will mean even more households falling into severe debt.
The Bank of England kept interest rates on hold when it met last Thursday. However, high street banks have begun to charge higher rates of interest on the cash that they lend to one another, a result of the mortgage crisis that has hit the US. If the banks decide to pass on that cost to their own customers, debt-laden consumers will face bigger monthly repayments.
“These figures are worrying evidence that while many have enjoyed the benefits of the credit boom, a large and growing number of people continue to pay the price, becoming overwhelmed by serious debt that can have a devastating impact on their lives,” said David Harker, chief executive of Citizens Advice. He criticised credit companies for lending more cash to customers already in debt. He also urged credit companies to negotiate with customers rather than issue them threats of court proceedings.
Total debts accumulated by consumers stand at a record £1,354.6 billion, exceeding the value of the output of the entire economy which stood at £1,330 billion in mid-2007. Phillip Hammond, the Shadow Chief Secretary to the Treasury, said last night: “An economy built on borrowed money is built on borrowed time.”
Source: timesonline.co.uk
Please post any news stories about IVAs here:
http://www.iva.co.uk/forum/default.asp?CAT_ID=5
See my Blog:
http://ivanews.blogs.iva.co.uk