Redundancy ‘a major cause of debt problems’

Those with credit card debt and owing money in other ways may suddenly find they go from being comfortable with their borrowing to unable to cope at a…

Those with credit card debt and owing money in other ways may suddenly find they go from being comfortable with their borrowing to unable to cope at all due to redundancy, according to a finance charity.

Figures published by the Office for National Statistics (ONS) today (November 9th) have indicated 43 per cent of the 674,000 people leaving a place of employment in the second quarter of this year did so because they were made redundant.

Consumer Credit Counselling Service (CCCS) director of external affairs Delroy Corinaldi said: "Redundancy is a huge financial blow for those affected. While many will find new jobs, large numbers will not or will have a gap before they do.

"This will leave them struggling with credit commitments they could easily keep up with before losing their job."

The CCCS noted nearly a quarter of those seeking help from it for debt problems last year blamed redundancy for their predicament.

Credit card debt may be among the forms of debt people are suddenly unable to service after the they have lost their position of employment and many people could benefit from a debt management plan, which spreads out repayments over a more manageable period of time.

The ONS identified the public sector as a part of the economy where redundancies are high, with the proportion of employees leaving involuntarily in the two years to the second quarter of 2011 rising from 0.5 per cent to one per cent, while the number who voluntarily left dropped from 1.1 per cent to one per cent.

By James Francis
 

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