Unemployment surge may increase debt problems

The number of people out of work has risen, new figures have shown.

Data published by the Office for National Statistics today (October 12th) revealed that the three months between June and August 2011 witnessed a 0.4 per cent increase in joblessness, to 8.1 per cent of the working population, or 2.57 million in headline numbers.

This represents the highest unemployed figure since 1996 and the actual tally of people in work was also down, dropping 178,000 in the quarter to reach 29.1 million.
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Such falls in the number of people in paid work may mean many are suddenly faced with losing the means by which they can pay back their loans, mortgages and credit card bills.

One indicator that may show how badly affected some people losing their jobs are is the latest jobseekers allowance count, which rose by 17,500 between August and September to 1.6 million.

That would suggest many who have become unemployed need to fall back on state provision rather than relying on their own resources such as savings.

For people whose debt may spiral once their means to pay it disappears, radical action like taking out an individual voluntary arrangement (IVA) may be the best solution, not least for those who might get a new job, but with less pay.

This would mean they can still make some payments, but not as much as before and one benefit of an IVA is that it can reduce payments in just such a way.

Unemployment in the UK may not fall much anytime soon, as a report by the National Institute of Social and Economic Research published yesterday (October 11th) said Britain is struggling through its weakest economic recovery since the end of the first World War.

Posted by Paul Thacker