January debt burden ‘leads to missed essential bills’

Some consumers miss paying essential bills because of the cost of meeting their debt repayments in January, it has been stated.

Managing director of the Debt Advice Foundation David Rodger said January is not a time when people rack up borrowing so they can pay their essential bills, as in fact the reverse is the case.

He explained: “It’s really the other way around, the debt tends to be racked up in November and December when people borrow money using credit cards, store cards, overdrafts and personal loans, to pay for a Christmas they can’t really afford.”

And many people find the “reality” of an expensive festive season hits them when bills start to arrive in the new year, not least on store cards where the interest free period has run out.

This leads to many consumers having such a struggle to pay back what they owe that some families even go without the basics and fail to pay their other bills, with households finding their money is “sucked away by debts”.

People getting into such a situation may find they could benefit from individual voluntary arrangements, which are designed to aid those with £15,000 or more of debt that cannot be paid back.

Working as an alternative to bankruptcy, it involves an agreement being brokered for creditors to accept lower repayments over a five-year period, something that is binding on all of them if three quarters of the lenders owed cash agree to the deal.

Mr Rodger’s comments came in response to research published last week by MyVoucherCodes.co.uk, which appeared to indicate January is a big month for racking up debt.

The website had found 26 per cent of those who borrowed money in 2010 did so in the first month of the year.