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People putting themselves at risk by debt decisions

8 June 2016

People are placing themselves at greater risk of losing their home, visits from bailiffs and even prison by paying off consumer credit debts before other priority debts, warns Citizens Advice.

New evidence from the national charity reveals 28% of people would prioritise consumer credit debts - such as credit card bills, personal loans or overdraft repayments - ahead of household bills, like rent, mortgage or utility bills.

The charity says the priority should always be to pay off household bills first, otherwise they risk  further financial and emotional hardship.

Half of adults in the UK have both household and consumer credit debts or bills, equivalent to 24 million people. Of those with both debts, Citizens Advice finds:  

  • 3.6 million people (15%) would stop paying their rent or mortgage before their credit card repayments

  • 6.5 million people (27%) would stop paying their council tax before their credit card repayments

  • 1.2 million people (5%) would stop paying their gas bill before a store card

By not prioritising household bills, Citizens Advice warns people are placing themselves at greater risk of eviction, visits from bailiffs, being cut off from energy supplies and even prison.

It comes as the charity reveals a major increase in the number of household debt problems it helps people with. Latest figures show more people are seeking help with rent, council tax, fuel and water debts while consumer credit problems are in decline.  

In the last year, 43% of the debt issues Citizens Advice helped with related to essential household bills (567,000 issues) compared to 34% five years ago (452,000 issues).

According to Citizens Advice, people sometimes do not prioritise household bills because they may not realise the consequences if they stop these payments.  In other cases many consumer credit debt creditors - like credit card companies or other lenders - often ‘shout the loudest’, making people believe they should be repaid first.

Citizens Advice is urging anyone who is struggling to stay on top of their bills and credit commitments to seek help sooner rather than later in order to stop debts escalating and avoid the serious consequences caused by non-payment.

Gillian Guy, Chief Executive of Citizens Advice, said:

“Falling behind on household bills can have serious consequences.   

“From getting the power cut off to bailiffs knocking at your door, to losing your home or even prison - failing to pay household bills can put people in vulnerable situations.

“Huge numbers of people are unsure of what debts they should prioritise when they get into difficulties which underlines how important it is for people to be able to access free, independent help to manage their finances.   

“Similarly being offered money advice at key moments in life could also help people make the most of their money, avoid debt and plan for the future.”

Since 2011, the proportion of debt issues Citizens Advice has helped people with has changed:

  • Problems with rent arrears have increased from 6% to 10%, with 125,000 issues in the last year

  • Council tax debt issues increase from  9% to 16%, with 212,000 issues in the last year

  • Credit card debt issues drop from 16% to 11%, with 142,000 issues in the last year

  • Personal loan problems drop from 15% to 9%,  with 122,000 issues in the last year

Previous research from the charity has also shown that people would find it helpful it money advice was offered at key times during their life, such as buying a first home or having a baby.

Notes to editors

  1. All polling figures are from YouGov. Total sample size was 2109 adults. Fieldwork was undertaken between November 27 and 30, 2015. The survey was carried out online. The figures have been weighted and are representative of all UK adults (over 18).
  2. The Citizens Advice service comprises a network of local Citizens Advice, all of which are independent charities, the Citizens Advice consumer service 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 see the Citizens Advice website.
  3. 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.
  4. To get advice online or find your local Citizens Advice in England and Wales, visit citizensadvice.org.uk
  5. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers.
  6. Local Citizens Advice in England and Wales advised 2.5 million clients on 6.2 million problems in 2014/15. For full service statistics see our publication Advice trends.
  7. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 2,500 service outlets across England and Wales.