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18-03-2008
More people are seeking help because they are having problems paying their essential household bills, according to figures released by national charity Citizens Advice
New debt figures released today show that Citizens Advice Bureaux in England and Wales saw mortgage arrears problems shoot up by 35% in the first two months of 2008 compared with the same period in 2007. The new figures also reveal continuing increases in problems relating to basic essentials such as gas and electricity, water, telephone and council tax debts.
A survey* of almost three-quarters (73%) of all Citizens Advice Bureaux in England and Wales reported that they dealt with 215,000 new debt problems in the first two months of 2008 alone.
The new figures reflect recent increases in the cost of living and suggest a growing number of people are having difficulty paying essential household bills. Debts relating to credit, store and charge cards still remain the largest category of debt. Unusually for the time of year, credit card debt problems were down by 9%, while problems with overdrafts were up almost 7% on the same period of the previous year.
Teresa Perchard, Director of Policy for Citizens Advice said:
"It is a worrying trend that our bureaux are reporting a very sharp increase in the number of mortgage arrears problems they are dealing with. These latest figures paint a worrying picture, suggesting a significant number of households are struggling to meet their most basic living costs. The combination of big increases in household bills, especially fuel, and rising housing costs is putting additional pressure on people’s finances when they are already stretched to the limit."
In the financial year 2006/2007 Citizens Advice Bureaux dealt with 5.7 million new problems, more than 1.7 million of which concerned debt. Debt is now the number one issue advised on in bureaux, accounting for nearly one in three of all enquiries, and CAB advisers around the country are dealing with over 6,600 debt problems every working day. The Citizens Advice Bureau network is the largest single provider of free, independent and expert debt advice in the UK.
Teresa Perchard added: "If people have debt problems they should get help straight away. We cannot stress enough the importance of telling your creditors as soon as you have difficulties in paying – they should treat you sympathetically. Get free, confidential advice from a CAB or other independent advice agency who can help you work out payment plans for your debts and explain what options there are. You can also make sure that you are claiming all the benefits you are entitled to. You may be missing out on money that could help off-set your costs."
Debt fact sheets are available at  http://www.adviceguide.org.uk/index/life/debt.htm or visit your local CAB.
Case studies
A CAB in the South West saw a woman facing eviction after getting into mortgage difficulties when her employer reduced her hours of work. When she received an unsolicited visit from her lender, (for which she was charged), she explained she was facing financial hardship. However the lender insisted she pay her arrears within one year at rate of £200 pm on top of the contractual monthly instalments which she could not afford. She was not aware of her legal right to clear the arrears over a 'reasonable' period which in cases of hardship could be as long as the remaining term of the agreement - in this instance over 18 years.
A CAB in Cornwall saw a young couple with a child who were having difficulties paying their mortgage and were being threatened with repossession. They had also accrued £900 of Council Tax arrears while trying to prioritise their mortgage payments. Their local council sent a bailiff company who demanded an immediate payment of £500.
A CAB in Bedfordshire saw a single woman with three children, one severely disabled. She had mortgage arrears of £5,000 with her ex-husband which steadily increased as the lender added charges for letters and a £100 fee for a debt counsellor. The woman was unable to make payments until her divorce settlement was finalised. The situation was making an already stressful time harder for the woman who was already struggling with pressures at home due to her child's health problems.
A CAB in Bedfordshire saw a couple with two children who had mortgage arrears of £13,000 and a suspended possession order on their home. They also had a secured loan of £15,000. Their housing costs, including a payment for arrears was £1130 pm and unaffordable. They had very little equity in the property and were being threatened with eviction. The couple also had two other creditors who had obtained CCJs and charging orders on the property. They were under a lot of stress and pressure and their relationship was being affected.
A CAB saw a 65 year old man who was retired. He used a payment card for his electricity, which was more expensive and paid for in advance. He had been paying £15 weekly and was £128 in credit. He was then told he had to start paying £27 a week which he could not afford.
A CAB saw a single man with multiple debts who was paying £13 a week in fuel charges which was more than 20% of his income.
A CAB saw a woman on Disability Living Allowance who lived on her own. Her only heating was from storage heaters. Her total cash income was approximately £70 per week and she was paying more than £30 per week on her electricity.
Notes to editors on the survey:
*The survey is based on a month on month comparison between January and February 2007 and January and February 2008 based on the problems dealt with by approx 73% of bureaux, over 300 Citizens Advice Bureaux in England and Wales.
Notes to editors on Citizens Advice
- The Citizens Advice service is a network of independent charities that helps people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more information in England and Wales; www.citizensadvice.org.uk
- The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
- Most Citizens Advice service staff are trained volunteers, working at over 3,300 locations across England and Wales.
- Advice and information www.adviceguide.org.uk
- Volunteer hotline 08451 264264 (local rate)
- Citizens Advice Guide to your rights, second edition: January 2008 - over 600 pages of practical, independent CAB advice. An invaluable resource for any bookshelf - available from all good bookshops; price £11.99; ISBN: 9780141034089
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