Debt repayment increasingly difficult says CCCS

| March 15, 2012
Debt repayment increasingly difficult says CCCS

Although households reduced their debts last year they face a ‘tide’ of difficulties in repaying them, according to a study by the Consumer Credit Counselling Service (CCCS).

The study of 370,000 cases handled by the counselling service suggests that youth unemployment and rising rents are key factors which cause people to fall into debt.

42% of the under-25s who sought help from CCCS last year were unemployed, and being out of work and a drop in wages were the main reasons given by nearly half of the organisation’s clients for falling into debt.

Clients living in private rented accommodation were particularly badly affected by debt, with many admitting that they were unable to pay their rent.

The report also highlighted an increasing number of older people in debt.

Demand for the organisation’s service from people over 60 has increased by 15 per cent in the past three years.

Chairman of the CCCS, Lord Stevenson, said: “Work carried out for us last year by the Financial Inclusion Centre showed that there is a persistent minority of older people trapped with extreme debt.

“It would appear that this minority is growing rapidly.”

As older people spend more of their income on essentials such as food, utility bills and petrol, they are more susceptible to an increase in inflation.

AgeUK’s Silver Retail Prices Index, which measures the cost of living for people over the age of 55, showed an 18 per cent increase since 2008, five per cent higher than for the general population.

The CCCS’s report also highlights an increasing number of people experiencing debt problems after taking out a payday loan.

The number of people who contacted The CCCS last year with concerns over a payday loan increased to 17,414 from 7,841 in 2010.

The Office of Fair Trading is due to publish the result of an investigation into payday loans later this year.

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