Debt charity StepChange has revealed that record numbers of people have contacted them in the first six months of 2019 for help with their debts.
The charity’s latest statistics reveals that of the 190,484 new StepChange clients who received full debt advice, the average level of unsecured personal debt was £13,799. This represents a rise of 2% in the past six months and 6% since 2016.
Meanwhile around a third (31%) of new clients’ outgoings were more than their incomes – the average monthly shortfall for clients with deficit budgets is an alarming £365.
The figures also reveal that unexpected life events are the three biggest causes of problem debt, with those experiencing a reduction in income (18%), injury or illness (16%) or unemployment or redundancy (16%), making up the bulk of new clients.
Phil Andrew, chief executive officer (CEO) of StepChange Debt Charity, said: “These statistics provide a sobering assessment of the scale of problem debt in this country. Across the board we are seeing red flags, including worrying proportions of new clients falling into debt due to reduced income, illness or because they rely on credit to pay for day-to-day living expenses. Clearly more and more households are struggling to hang on and are ill-equipped to deal with any economic shocks the future may hold.”
What can be done to prevent this?
It is clear from StepChange’s statistics that more needs to be done to help people plan their financial futures better, perhaps factor in to their finances “one-off events” and also to ask for financial advice earlier.
Tom McPhail, head of policy at Hargreaves Lansdown: “Most of the time most people just want a bit of help and guidance. There’s plenty of evidence that access to the right guidance and reassurance can transform people’s confidence; ultimately it can make a significant positive impact on their financial futures.”
If approaching a financial adviser is not within budget then people can seek advice from StepChange, the Debt Advice Foundation or their local Citizens Advice Bureau to name a few organisations and charities.