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Jobless trapped by massive debts

Jobless trapped by massive debts

Category: Debt

Updated: 08/03/2011
First Published: 06/09/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Huge numbers of people claiming Jobseeker's Allowance (JSA) owe thousands of pounds in unsecured debt that they have no chance of repaying.

The Consumer Credit Counselling Service (CCCS) has revealed that one in eight people who contacted the charity during the first half of 2010 for help with their unsecured debts were claiming JSA.

On average, these people were found to owe £15,412 to five different creditors.

Even if they were able to spend their entire weekly JSA payment on repaying their unsecured debts, it would take them over four and a half years to become debt free.

And that would only be if the interest on their debts had been frozen.

One of the main reasons given by people for their debt problem is unemployment.

Over the first six months of 2010, almost a quarter of those who contacted the CCCS cited unemployment as a reason for their woes.

Debt advice specialists such as the CCCS will offer free and impartial advice to those with debt problems.

"There is a causal link between unemployment and debt," said CCCS chairman Malcolm Hurlston.

"Unemployment can devastate the finances of any family and our experience shows that once somebody with few financial options is forced to take out a loan to cover living costs, they are often then trapped in debt for years to come.

"Thousands of people claiming Jobseeker's Allowance are ensnared by unsecured debt and their needs demand specific study.

"The Government must be mindful of how welfare cuts will affect those living off benefits and move to ensure they are not damning huge numbers of people to a lifetime of debt."

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