According to the latest on-line personal debt statistics published by www.creditaction.org.uk outstanding personal debt on unsecured credit has gone down from this time last year. This is good news on the surface but let’s not celebrate just yet , if you dig a little deeper the picture is not quite as rosey. If you look at the situation with regard to secured credit for the same period (Sept 30th 2011 to Sept 30th 2012) borrowings have gone up by more than the rise in the level of unsecured credit, the total now owed by me, you and your neighbours is £1.415 trillion pounds .
Now let’s say we see ourselves out of recession and lines of credit are opened up by the banks and people start to flex their plastic, this could be according to one of the speakers I was listening to at a major debt conference in Manchester a few days ago, potential for a new spike in those seeking debt problems. Anyone trapped into a mortgage with a lender increasing its SVR (Standard Variable Rate) as we have discussed in this column back in the Summer, and coming to the end of a fixed or discounted period could see themselves in difficulty. Now add in a change of circumstances such as a relationship breakdown or loss of income and the problem quickly escalates, compound that by delaying taking action or asking for help by getting quality debt advice and we have another major personal debt problem on its way.
According to Credit Action one of the countries leading money education sites there are around 700,000 people in a debt management plan, however there are over 900,000 people that should be seeking help and have buried their heads in the sand for now.
8,465 people a day went to the Citizen Advice Bureau each working day over June 2012 for help with personal debt. Although some CAB’s are able to see those needing help the same day, this is often purely to set a date to see a counsellor, this can be as much as 9 weeks ahead.If your one of these 8,465 people facing issues that’s a long time, particular with aggressive creditor action in the form of letters, late night phone calls and debt collectors, often trying to pass off as bailiffs.
The CAB’s are staffed in almost the vast majority of cases by unpaid volunteers, they do a commendable job but due to the vast numbers of people seeking help are not able to always look as in depth as possible at a clients situation. If you need help make an informed choice, by all means go to the CAB for sure, we recommend you do, go to the “fee free” debt advice charities like the CCCS but also look at a range of “fee charging” debt management companies and consider all options available.
Although paying £1 a month to a creditor might be an immediate short term fix to make the debt affordable, but will it get you out of debt, the point is the debt will never be cleared and the debtor is then potentially trapped in a permanent state of “poor credit” and cannot move on with their life. Most people with debt issues want to pay back their debts, they know they had the money and they are decent people who want to repay their debt but now need help to reschedule the way that debt is repaid.
Take away peoples goals and hope for a positive future by remaining in a permanent sate of debt and bad credit, by paying £1 a month, and that is a sad situation. I remember a line of an American motivational speaker I follow that said “where there is hope in the future there is power in the present”, the meaning being that where there is hope this spurs on the individual to take action NOW in the present. Procrastination is a killer of dreams, wealth, happiness and sometimes life itself, have you ever heard “I wish he would have gone to the Doctors sooner”, I am sure you have , I know I have.Alternatively without hope you literally have “no hope” and the reality is EVERY debt problem has a solution, the debtor may not want to face that solution, BUT there is always a solution! So if your thinking about money and its in a negative context then its time to go and seek debt advice and remember make your choice an informed one. You could see 5 providers in one day.
Remember if you want to talk about any issues or questions you only need to text MONEY to 66777.