1.7 million Need debt help

Households in the UK are increasingly falling prey to debt and are turning to the Citizens Advice for assistance. This is the reason for the 20 percent increase in requests to the Citizens Advice.

These requests are from households struggling to make payments on their various types of debt and comprises one third of the organisation’s workload. Not only is the public struggling with rising debt repayments; they are finding it difficult to handle their day-to-day living expenses and inquire on how to meet their gas and electricity arrears. These types of queries together with enquiries on shortfalls to their council tax have increased by more than a third.

There are concerns that the consumer boom, which was a rather lengthy one, is responsible for the flood of calls for help. The Citizens Advice fears it is now taking its toll and that more customers will be affected by the rising levels of debt.

The effects of the banking credit crunch are sure to have an impact on the debt levels. High street banks are charging each other higher interest on any cash they lend each other. This as result of the mortgage crisis that hit the US shores. It may not be long before the banks decide to pass on this cost to their customers and these consumers will face an even bigger monthly repayment on their debt.

It is concerning that the total consumer debt has reached £1,354.6bn. This figure exceeds the amount generated by the entire economy, which stood at £1,330bn in mid-2007.

David Harker, who is the Chief Executive of Citizens Advice said, “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,”. Credit companies, Harker says, plays a role in this crisis and he urged them to re-consider providing more credit to debt-strapped customers. Citizen Advice is urging credit companies to negotiate with their customers and not issue them with threats of court proceedings.

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