More seek help over debt problems

A RISE in personal debt has led to a record number of people seeking financial advice from Ipswich Citizens Advice Bureau.More than 4,200 people sought help from the bureau in six months last year, compared to just 3,000 over the same period in 2006, new figures show.

A RISE in personal debt has led to a record number of people seeking financial advice from Ipswich Citizens Advice Bureau.

More than 4,200 people sought help from the bureau in six months last year, compared to just 3,000 over the same period in 2006, new figures show.

The bureau is regularly seeing people with debt of between £10,000 and £30,000 but in some cases these figures reach £50,000 to £60,000, not including mortgages.

Bureau manager Ian Burnett said: “The number of people we see with debt problems has grown almost exponentionally over the last 10 years. Debt has overtaken benefits as the biggest problem we deal with.

“It's difficult to tell if people are spending as a form of distraction - but in some cases it's 'live now and blow the future'.”

Ipswich CAB received 2,063 inquires about personal debt between April and June last year and a further 2,197 between July and September.

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For the same period in 2006 the CAB saw about 3,000 people.

Although it has moved from a paper-based system of recoding inquiry numbers to a computer system, Mr Burnett said there had still been a significant rise.

“Until recently credit has been relatively easy to get. The majority of debt has been caused by something dramatic happening in the family - such as someone losing their job or becoming ill.”

Mr Burnett said people were increasingly deciding to declare themselves bankrupt as a way of reducing what they have to repay.

But he warned of the effects debt can have: “It makes people very unhappy. People don't realise the affect it will have on them.”

Mr Burnett spoke as a survey showed guilt can lead to people racking up debt over Christmas.

More than one in three people said they felt guilty if they couldn't provide the presents their friends and family expected and two out of three of these individuals are prepared to go into debt rather than be viewed as a Scrooge.

The eastern region of R3, the Association of Business Recovery Professionals, questioned more than 1,000 adults throughout the UK.

R3 eastern region council member Chris Williams, a partner at the Ipswich office of McTear Williams & Wood, said: “The figure for 'guilt-givers' prepared to go into debt over Christmas rises to nearly 50 per cent if respondents have children under the age of 16 years.

“We are seeing record levels of personal insolvency in the UK and this is undoubtedly the result of people over-extending themselves.”

Top Tips from the CAB

Plan ahead. Work out how much you can realistically afford before you start spending.

Set aside a little for period of heavy spending, such as Christmas. This can be done with an interest bearing account. (Investigate saving with a credit union, where you may then be able to borrow up to three times your savings - contact www.abcul.org or 0161 832 3694 for list of credit unions and full details).

Try shopping with cash only - that way you can't spend more than your budget. If you can afford to pay for your goods outright, don't be persuaded to take out credit unless it really does work out cheaper.

Try not to feel pressurized by children into buying expensive toys or other items you can't afford. Explain the situation to them. And don't be tempted to buy toys from catalogues unless you've no other option - they can often work out more expensive.

Avoid store cards - most are poor value and some can charge whopping interest rates of around 30 per cent.

If you do need more money, don't just run up an overdraft without talking to your bank - this will be much more expensive than if you arrange it beforehand.

If you're using credit shop around for the best deal, and check that the monthly installments and the total charge are within your budget before signing on the dotted line. Look out for “interest free” deals, but check the time limit on repayment. You may find that you cannot repay it in time and the interest is too high.

Shop around, you may find it cheaper elsewhere.

Remember that the hefty winter bills arrive in February when you're most likely to be feeling the pinch after an extravagant festive season, so always allow for these in your budget. Make sure you keep up with all your priority bills over this period such as mortgage/rent, gas, electricity and council tax.

If you do run into debt problems, don't ignore them and hope they'll go away - they won't. Get advice as early as possible. See the Citizens Advice website www.adviceguide.org.uk for advice on how to tackle debt, or contact your nearest CAB for free, confidential, independent money advice.

For more information call the bureau on 01473 219771.

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