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Households struggling with debt

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by Jan Harris
Households struggling with debt

Nearly a third of people surveyed by consumer group Which? said they are struggling to manage financially, and the situation could worsen if further benefit cuts are announced in the Chancellor’s Autumn Statement this week.

Which? surveyed 2,100 people in October and found that nearly 10 per cent of the 25 million households in the UK have defaulted on their mortgage, rent, loan repayment or other household bill.

1.5 million households have been forced to turn to expensive credit options such as overdrafts or payday loans just to make ends meet.

Which? warns that this can soon lead people into a spiral of debt.

Richard Lloyd, the Executive Director of Which?, said: “There are huge knock-on effects for people if they are not paying their loans, paying their bills, their housing costs on time.

“They often have to pay extra charges, pay extra interest where they are defaulting on debts, and they are unable to get access to credit.

“People are having to turn to increasingly expensive ways to meet their costs.

“It’s a real worry for many, many people getting in to debt.”

Just a quarter of those questioned by Which? said their level of income allowed them to live comfortably.

In his Autumn Statement, George Osborne is expected to say that it would be a “disaster” to abandon austerity measure and to announce a freeze in some benefits for the unemployed.

The recent Legal and General MoneyMood survey echoed the study by Which!

2.5 million individuals and families are continuing to struggle, Legal and General said, 300,000 more than in 2010, before the UK fell back into recession.

The MoneyMood survey highlighted the increasing problem of fuel poverty, which is when more than 10 per cent of household income is spent on fuel.

Two out of five households said they were close to fuel poverty, suggesting that the number could soar if the cost of fuel increases slightly.

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News posted: December 3, 2012

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