Nearly 15,000 people claiming Jobseeker’s Allowance (JSA) are struggling with debts of over £15,000, according to figures released today by a debt charity.
The Consumer Credit Counselling Service (CCCS) revealed that in the first half of 2010, 14,446 people claiming JSA who contacted the charity owed an average of £15,412 to five different creditors.
This figure amounted to one out of every eight people who contacted CCCS during this period, with the charity warning that huge numbers of people in this situation would never be able to pay back their unsecured debts, even if they put their entire JSA towards repayments.
Malcolm Hurlston, chairman of CCCS, said: "Thousands of people claiming JSA are ensnared by unsecured debt and their needs demand specific study.
"Government must be mindful of how welfare cuts will affect those living off benefits and move to ensure they are not damning huge numbers of people to a lifetime of debt."
Steven Jackson debt expert at Beatmydebt.com urged people who are struggling with debt to get professional advice. "If your income is made up of benefits and the amount you can repay each month is minimal, it could take many years to become debt free using a debt management planIN these circumstances this would be the wrong solution" he said.
"If you are facing a lifetime of debt, alternative solutions such bankruptcy can be used to help you become debt free in 12 months, especially if you are renting your property" Jackson added.
Unemployment primary catalyst for debt problems
According to the CCCS figures the proportion of their clients who are in debt while claiming JSA is almost three times higher than in the general population.
The charity said that one of the key reasons for the debt problems was unemployment, with 22.4 per cent of people who contacted CCCS in the first half of 2010 citing this as a reason for their debt problems, a figure which is disproportionately higher than the current eight per cent level of UK unemployment.
Hurlston added: "There is a causal link between unemployment and debt. Unemployment can devastate the finances of any family and our experience shows that once somebody with few financial options is forced to take out a loan to cover living costs they are often then trapped in debt for years to come."