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Perfect financial storm as 10 million people in UK struggle with debt 13 January 2012
Daniel Culpan (about the author)

An estimated 10 million people in the UK - amounting to around 20% of adults - are in a 'constant struggle' to manage their debts, according to research from the Money Advice Trust (MAT).

January is often a tough time for many people's finances, with outstanding debts from Christmas and New Year celebrations, the arrival of winter heating bills and squeezed budgets. An estimated 2.5 million people in the UK are currently in arrears on at least one type of consumer credit, household bill or payment.

James Falla, personal debt expert at beatmydebt.com confirmed that January and February are some of the business months of the year for providing debt solutions.

"Generally speaking we see the number of people coming to us for debt help and advice rise dramatically in January. It is a combination of people waiting until after Christmas to tackle their problem or getting into trouble in December and making a New Years resolution to get back in control of their finances". 

"We also see another surge in demand in September and October after the summer months. However the New Year is always a busy time" Falla added.

Rise in demand for debt advice

The research also predicts a dramatic rise in demand for debt advice in the first half of 2012, largely as a result of rising unemployment and flat wage growth.

This prediction, based on forecasts from the Office for Budget Responsibility (OBR), follows an increase in the number of people getting free debt advice in 2011 - rising to 1.54 million, compared with 1.4 million in 2010.

James Falla agrees. "People's finances are under intense pressure as the cost of living surged in 2011 but incomes largely remained flat or even decreased for some people. This situation has created a perfect financial storm and it is inevitable that some people will not be able to hold on." He said

"Many are supplementing their income with credit and are more and more turning to payday laons. However as these options dry out, they are forced to get debt management help" Falla added.

Falla advised anyone struggling with debt to get free advice. "Free debt advise is available from most debt management organisations and companies. They will help you understand the different debt management solutions such as debt managememnt plans and Individual Voluntary Arangements and to chose the most appropriate option" he said.

Source: Think Money