According to EuroDebt, loss of income is the biggest single factor for people entering a Debt Management Plan.
Over a quarter of its clients (25.4%) entered a DMP in the past tax year for this reason. Add to this Redundancy (4.53%) and Unemployment (6.67%) and overall 37.04% of clients are facing debt woes due to a change in their job status and income – factors that are in most events out of their control.
In recent weeks, the ONS revealed a record increase in the number of employees and self-employed who are working part-time because they can’t find a full-time job.
A debt spiral and poor financial management follow closely behind with 22.35% and 13.42% respectively making these issues behind 35.77% of all Debt Management Plans.
Vance Parsons, Director of EuroDebt comments:
“There has been much debate and speculation about the actual cost to families for the cut in benefits, increase in taxes and rise in living costs. What is clear to us is that those that have seen their job situation change are the most vulnerable to debt problems.
"And with the threat of interest rate rises in coming months, things are going to get even tougher for middle income families who may have saddled themselves with large mortgages in the belief their jobs and income were secure.
“In tough times such as these it’s easier than ever for a small amount of debt to spiral out of control, robbing Peter to pay Paul using credit cards to pay off bills – including those of other credit cards. Interest charges and late fees all add up and increase the debt quickly.
“At EuroDebt our priority is to protect a client’s home and ensure that a realistic repayment arrangement is negotiated with creditors, prioritising secured loans along with council tax, utilities and critical insurance.
"We conduct a thorough review of a client’s income and expenditure to ensure that all debts are taken into account and a fair assessment of their living expenses is determined so that they can continue to maintain a reasonable quality of living. We can also look at where they can cut costs on banking and energy bills for example.”
“Our findings should certainly ring warning bells for those families already struggling. We would strongly advise people already facing debt problems to seek help in tackling them without delay."
