Benefit eligibility ‘should be considered’ by those in debt

People who have credit card debt or owe money in other ways should see if they can claim any benefits, an expert has said.

Managing director of Debt Advice Foundation David Rodger commented: "If they [people in debt] don't have enough [money] left over to meet their monthly credit commitments – things like personal loans, credit cards and overdrafts – then it is worth checking that they're in receipt of their full benefit entitlement."

Failure to fully claim everything they are entitled to is a "common but avoidable" mistake many make, he pointed out, with £16 billion of benefits going unclaimed every year.

Another thing consumers should do is to make sure that they pay off their most expensive debts first – such as payday loans and costly cards – as these attract the highest levels of interest, the expert stated.

It is when such actions have been undertaken and debt still remains unpayable that consumers should seek further help, Mr Rodger said.

One option for people in deep and unmanageable debt is an individual voluntary arrangement, which may be used by those owing £15,000 or more, provided the deal is agreed to by at least three quarters of creditors.

It involves freezing interest, lower monthly repayments and all remaining debt being written off after five years, with creditors often being willing to accept this as they will lose less than would be the case in the event of bankruptcy.

The level of interest being accrued on debt built up through Christmas spending is something consumers should make a priority of being aware of at this time, spokeswoman for Moneyfacts.co.uk Rachel Springall recently said.

She warned that charges such as those imposed for exceeding overdraft limits can "soon mount up".

By Joe White