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There's nothing worse than being in debt and not sure which way to turn, so many people rely on charities to help with their debt problems. However, figures from one such charity have revealed that record numbers of people sought debt help last year, signalling that the issue is becoming increasingly prevalent.
The data shows that a record 600,000 people sought advice from StepChange Debt Charity last year, an increase of 9% from 2015 (550,000) and equating to one person every 53 seconds. The average amount of unsecured debt those callers suffer from has also risen, up from £13,900 to £14,251, the first time the charity has recorded an increase in eight years.
Indeed, the last time the charity saw an increase in debt was during the economic crisis of 2008, and there are concerns that the recent boom of cut-price deals has encouraged people to become more frivolous once again.
The figures went on to reveal that the increase in debt levels is sharpest among those under the age of 25, who saw their average debt level increase by 13% (up from £5,151 in 2015 to £5,812 in 2016), while those aged 25-39 saw a 6% rise in debt levels from £12,841 to £13,178. Indeed, those aged under 40 now make up 60% of the charity's clients, up from 52% five years ago, highlighting a clear shift in behaviour.
The report notes that the increase in debt comes at the same time as a surge in consumer borrowing, as reported by numerous sources – Government and industry alike – with household debt now heading back towards its 2008 peak. Indeed, latest figures from the BBA show that consumer credit borrowing grew by 6.6% year-on-year in February, so many are still taking advantage of the initially favourable environment – the issue being when those borrowers take on too much.
This is compounded by concerns over rising inflation and the higher interest rates that could follow it, and as a result, StepChange is calling for Government action.
The charity wants the Government to commit to a 'breathing space' scheme "to better support hard-pressed households who fall into financial difficulty", whereby those who seek advice for debt problems would potentially be given a period of between six months and a year in which interest and charges are frozen. At the same time, enforcement action (such as visits from bailiffs) would be halted, allowing the individual time get back on their feet.
"Too many people are borrowing just to get by, struggling to save, working hard and finding it difficult to make ends meet," said Mike O'Connor, chief executive of StepChange Debt Charity. "The record number of people coming to us for help shows how dealing with debt is a daily challenge for ordinary working households.
"Borrowing is growing at its fastest rate in 10 years and for the first time since the economic crisis of 2008, the level of problem debt we see is also rising. If this continues, the social cost of personal debt will increase even further.
"This makes it all the more urgent that the Government commits to a 'breathing space' scheme that will help people who are struggling to get back on their feet. Breathing space is the missing piece of the puzzle when it comes to debt solutions and it already has widespread support. As levels of personal borrowing approach their 2008 peak, we need a set of policy measures to better protect those who fall into difficulty."
While it's hoped that Government intervention will soon be available, it could take time for a scheme of that kind to be implemented. That's why, if you're already struggling with debt, you don't want to wait – now's the time to take action, because the longer you leave it, the worse it could be.
Read our guide on dealing with debt to get started, and don't be afraid to speak to your provider or an impartial debt charity if you need extra support. Hopefully, you'll be able to break free from the cycle of debt in the not too distant future.
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