MANY people have no hope of clearing their debts in their lifetime, with the typical person dealing with Citizens Advice looking at an average of 93 years to pay off their debts.
Figures from Citizens Advice show that the average CAB client owes £16,971 – two thirds more than the average in 2001, and nearly 18 times their monthly household income.
One in three have mortgage or rent arrears, and a quarter had council tax arrears.
David Harker, chief executive of Citizens Advice, said: "These findings make sobering reading, especially as they are based on data collected just before the worst of the credit crunch began to bite. Since then we have seen an enormous rise in the number of people turning to us for help because they have lost their job, so we can expect to see many more people struggling with severe debt problems as the recession continues to take its toll.
Low income, combined with irresponsible lending, unreasonable debt collection practices and badly informed financial decisions are at the root of many of our clients’ debt problems. For many there is little prospect of their income increasing or their circumstances changing. The reality is that they are condemned to a lifetime of poverty overshadowed by an inescapable burden of unpayable debt.
“In the current climate it is absolutely vital that lenders and creditors treat people fairly and sympathetically and do everything they can to help ease their debt problems and avoid adding to them. Those for whom there seems no light at the end of the tunnel also need solutions that can offer them a fresh start, lift them out of the poverty trap, and give them a chance to build better financial skills for the future."
Nearly 300 people a day are are declared bankrupt or go into an individual voluntary agreement (IVA), according to figures from insurer More Than, and UK debt is currently increasing by an unimaginable £135m a day. In the last year alone repayments on personal debt reached a staggering £81.8 billion.
To help customers sort out any legal problems, More Than Legal Services is providing online, interactive documents to communicate with creditors and offer solutions, and customers have access to a legal helpline where they can get information on debt and the law.
Annette Lepper, head of More Than Legal Services, said, "In the current economic climate, people can become extremely worried about debt. It's tempting to bury your head in the sand and hope that the problem will go away, but people should tackle money problems at the earliest possible stage to prevent financial difficulties from spiraling out of control.
"More Than Legal Services provides customers with information and tools so they can take simple steps to assess their financial situation and hopefully get to grips in managing their debt. In today's climate it's imperative that people take debt support where it's available. "
The documents available to customers include an income and expenditure statement, a holding letter to creditors, an offer letter to creditors which is designed to offer a solution to your debt crisis to your lender, and a letter to your mortgage provider.
Burying your head in the sand will not make your debt problems go away. In fact, it could make them a lot worse, and talking to your creditors sooner rather than later about the problems you are having will be beneficial.
Go to More Than documents at www.wedomore.co.uk/legal_services
Alison Steed
