Name:

Email:

Position:

Phone:

Mobile:

Skype Address:

IM Address:

Description:

 

Personal debt increases among Londoners 28 June 2009
Steven Jackson (about the author)

Financial advice partnership Capitalise says the average level of debt among Londoners seeking help has increased by 16% to £18,131.

Personal debt in London has become deeper, more widespread and complex since the recession, and creditors are more aggressive in recovering payment, debt advisers said today.

The average level of debt among Londoners seeking free face-to-face advice has increased by 16% since January 2007 to £18,131 a person, even though their average annual household income has remained the same at around £10,000.

Continue reading below...

But the economic downturn has made creditors less willing to negotiate, according to a report from Capitalise, a partnership of London debt advisers, which has found that between 2007 and 2008 repossessions of assets increased by 40%.

Graham Fisher, chief executive of Toynbee Hall, the charity leading the Capitalise partnership, said: "Our advisers report that creditors are reacting to the debt crisis by passing on more cases to debt collection agencies and resorting to court actions or bailiffs.

"We're calling for an integrated approach between local and central government and the voluntary sector in order to tackle the increase in personal debt caused by the recession, and more intervention where creditors are acting unreasonably.

"Employers also have an important role to play in preparing their workforce for potential redundancy and helping them to take preventative measures to stop them sliding into debt."

Helal Miah, a debt adviser for Toynbee Hall, said he had seen several examples of bailiffs employed by local councils using bullying tactics to extract money from vulnerable debtors.

He cited the recent case of an elderly and disabled client on benefits: "He owed £600 in council tax. The bailiffs got into his home, bullied him into paying £200 on the spot, and then said they would be back the following week for another £50. But when I took the case to the council it agreed to an order on his benefits, which means just £3.50 will be taken each week, because that is all he can actually afford."

He added: "I have dealt with a lot of cases where the bailiffs are aggressive and rude: it's their job, that's what they are paid to do. The image you see on TV, where they are sweetness and light, isn't what you see when the cameras are switched off."

The report, which is based on data collected from almost 20,000 people who have received free face-to-face debt advice, has been published to coincide with a debt summit organised by Capitalise and the mayor of London.

Since April last year there has been a 35% increase in debt inquiries to Capitalise and people now have to wait up to seven weeks for advice, leaving many Londoners suffering alone. Debt advisers are now only able to see the most urgent cases.

Capitalise's debt advisers have also noticed a trend in increasing numbers of wage earners and homeowners coming to them for advice – squeezing out less affluent clients. Since 2006 they have seen 13% more homeowners and 10% fewer social tenants.

The debt advice charities say inner London has a higher need for debt advice because its inhabitants suffer more from financial exclusion, but those living in outer London have considerably higher debts. Boroughs worst affected by debt include Bromley, Lewisham, Greenwich, Bexley and Hillingdon, with between 5,510 and 7,757 clients a year seeking free debt advice.

Source: Beat My Debt