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Numbers seeking debt advice soar

The number of people seeking advice on how to meet their debts has hit record levels, the Citizens Advice Bureau (CAB) has warned.

The CAB said 1.7 million people sought debt counselling last year, up 20%. CAB is handling 6,600 debt enquiries a day.

Those with problems paying credit card bills and other unsecured loans accounted for 40% of all enquiries.

But CAB reported a “worrying” rise in the number of people struggling to meet day-to-day outgoings like phone bills.

‘Paying the price’

The past two years have seen the number of people seeking debt advice spiral, as a sharp rise in the cost of borrowing has made life far more difficult for many households.

CAB said the figures illustrated how the consumer credit boom of the past decade – characterised by an easy availability of cheap credit and by people taking on more and more debt – had turned sour for many.

“These figures are worrying evidence that while many have enjoyed the benefits of the credit boom, a large and growing number of people continue to pay the price,” said David Harker, CAB’s chief executive.

“Lenders need to do much more to check that borrowers are really in a position to keep up repayments”
David Harker, Citizens Advice Bureau

Bankruptcy-related enquiries rose 50% last year, while the number of people requiring help with their overdrafts rose 14%. Mortgage-related enquiries rose by 11%.

Most disturbing of all, the CAB argued, was a 33% rise in the number of people struggling to pay their energy bills and a 25% rise in enquiries about council tax payments.

Banks and other financial providers needed to act more responsibly, Mr Harker stressed, by not offering new sources of finance to people who were already struggling.

“Lenders need to do much more to check that borrowers are really in a position to keep up repayments when they take out credit,” he said.

“We also want to see creditors being more willing to negotiate with people in debt.”

The CAB added that it needed 5,000 new volunteers to deal with the surge in enquiries.

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