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More seeking help with mortgage and fuel arrears says Citizens Advice

10 October 2008

New figures released today by national charity Citizens Advice reveal that more people are seeking advice on how to manage mortgage and secured loan arrears and fuel debts. Getting help, says the charity, can make a huge difference in coming to a workable agreement with your lender or fuel company to manage your arrears, but added that it’s vital that lenders show forbearance, treat people in difficulty fairly and do everything they should to help people stay in their home or manage arrears.

The figures reveal that Citizens Advice Bureaux in England and Wales saw 35% more mortgage and secured loan arrears problems over the last 12 months, compared with the previous 12 months, with 77,324 new enquiries since October 2007. The most recent figures for July to September 2008 (Q2 2008/9) show a 51% increase in new mortgage and secured loan enquiries and a 10% increase in fuel debts compared to the same period last year (Q2 2007/8).¹

However, the charity welcomed a reduction in the number of credit, store and charge card debts, and unsecured personal loan debts being seen by bureaux, down 4% year on year, although combined this still represents the largest type of debt the Citizens Advice Service sees at 35% of all the debt problems handled by bureaux. Mortgage and secured loan arrears account for 5% and fuel debt 4% of the total debt problems bureaux see.

A breakdown of clients with mortgage and secured debt arrears found that over half (51%) were aged 35-49. Half (49%) were households with dependent children and 1 in 5 (18% of total) were single parents with dependent children. 13% were disabled and 1 in ten (10%) had a long term health problem.

A recent Citizens Advice snapshot survey² of clients with mortgage and secured loan arrears in June and July this year found that the average arrears people were in when the lender started possession action was 4 months. The most common reasons cited for people falling into arrears were loss of job or failure of business (20%), ill health (17%) and relationship breakdown (16%).

Citizens Advice Chief Executive, David Harker said:

“While we are pleased to see the number of consumer credit problems going down, the increase in the number of enquiries about basic essentials is worrying and these figures show how the current economic situation is hitting vulnerable and low income households the hardest.

“To prevent this situation worsening, it is vital that mortgage lenders and fuel companies do everything in their power to help people in arrears to come to a workable solution over repayment arrangements, rather than piling on extra charges. All creditors should treat borrowers in arrears fairly and sympathetically, negotiate with borrowers in trouble and only use court action for mortgage arrears as a last resort.

“Anyone who is worried about debt should seek advice straight away. Get help from a CAB, or other free independent advice agency, who can help you work out payment options, check you are receiving all the benefits you are entitled to and help you claim any money that could off-set your costs. Up to £9.9 billion means tested benefits went unclaimed last year³ and a free, confidential benefits check could ensure that you aren’t missing out on money that is rightfully yours.

“If you are falling behind with payments on a mortgage or secured loan you should speak to your lender straight away. Lenders should negotiate with borrowers, but if you are having problems, make sure you seek free, confidential, independent advice without delay. Receiving court papers doesn’t mean that you are automatically going to lose your home. Getting advice, even at a late stage, can help the majority of people come to a workable agreement with their mortgage lender and can make all the difference between saving or losing their home.”

Tips for people struggling with their mortgage:

www.citizensadvice.org.uk/pressoffice/press_20080815

Credit and debt fact sheets:

New windowwww.adviceguide.org.uk/debt_fact_sheet_index

6-12 October is Advice Week. For Advice Week 2008 Citizens Advice is working with advice agencies Advice UK, Advice Services Alliance, Age Concern, Law Centres Federation and Youth Access as part of the Working Together for Advice project funded by the Big Lottery to to promote the value of advice to the public.

Key facts

Category

Total issues for the year 2007/8

Percentage

Benefits & Tax Credits

1,515,483

27.40%

Consumer Goods & Services

130,915

2.40%

Debt

1,736,637

31.30%

Education

22,123

0.40%

Employment

476,261

8.60%

Financial Products & Services

115,907

2.10%

Health & Community Care

73,890

1.30%

Housing

399,392

7.20%

Immigration, Asylum & Nationality

79,366

1.40%

Legal

274,957

5.00%

Other

63,208

1.10%

Relationships & Family

295,387

5.30%

Signposting & Referral

174,648

3.20%

Tax

47,649

0.90%

Travel, Transport & Holidays

38,990

0.70%

Utilities & Communications

95,433

1.70%

Total Advice Issues

5,540,246.16

Notes on mortgage and debt figures:

1. Number of issues seen by Citizens Advice Bureaux in England and Wales

2006/7

Q3

2006/7

Q4

2007/8

Q1

2007/8

Q2

2007/8

Q3

2007/8

Q4

2008/9

Q1

2008/9

Q2

Mortgage and secured loan arrears

13,462

15,613

13,942

14,349

16,402

19,360

19,906

21,656

Fuel debts

14,077

17,824

17,825

16,986

16,687

17,880

18,128

18,732

Credit, store & charge card debts

92,870

111,015

90,452

83,881

82,684

93,140

88,698

88,696

Unsecured personal loan debts

62,541

76,527

66,992

61,798

62,651

70,600

65,974

67,260

2. Based on telephone interviews with advisers about a sample of 417 CAB clients who came to bureaux with new mortgage and secured loan arrears in late June and early July.

3. Source DWP: New windowwww.dwp.gov.uk/income_analysis/0607_NSPR

Notes to editors

  1. The Citizens Advice service comprises a network of local bureaux, all of which are independent charities, and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more information in England and Wales see www.citizensadvice.org.uk
  2. 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. For online advice and information see New windowwww.adviceguide.org.uk
  3. Citizens Advice Bureaux in England and Wales advised 2.1 million clients on 7.1 million problems from April 2010 to March 2011. For full 2010/2011 service statistics see: www.citizensadvice.org.uk/press_statistics
  4. Out of 22 national charities, the Citizens Advice service is ranked by the general public as being the most helpful, approachable, professional, informative, effective / cost effective, reputable and accountable. (nfpSynergy’s Brand Attributes survey, May 2010).
  5. Most Citizens Advice service staff are trained volunteers, working at around 3,300 service outlets across England and Wales.