Unemployment forces debt on more households

More and more households suffering with unemployment are developing financial concerns, which may make it tough for them to get debt free.

Joanna E…

More and more households suffering with unemployment are developing financial concerns, which may make it tough for them to get debt free.

Joanna Elson, chief executive of the Money Advice Trust, noted there has been a 27 per cent increase in the number of workless households in the UK over the last two years. This is negatively affecting people's finances, as is evidenced by the fact the number of calls to the National Debt Helpline have doubled in the same time period.

"We have grave concerns that households witnessing a fall in income due to unemployment will start to default on debt repayments. There can be no doubt that continuing high levels of unemployment are contributing to the personal debt problems faced by the British public," Ms Elson remarked.

For those who are still lucky enough to be in work, there are a number of debt consolidation methods open to them. One such measure is an individual voluntary arrangement and this process will let people repay their arrears in reduced-rate monthly instalments over a period of five years.

Ms Elson observed the situation could be made worse by the number of "iceberg bankruptcies" that exist in the UK. These are people who have a job but cannot afford any drop in their level of income and a study carried out by the University of Wales discovered there are two million consumers who fall under this bracket in the Britain.

Her comments come after a spokeswoman for the Consumer Credit Counselling Service stated people should try and repay their debts at the highest rate possible. This is because if Britons are only contributing the minimum, it will cost them a great deal more in the future. She added those who are doing this will generally be suffering from a debt problem.

Posted by Amy White
 

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