NEW GENERATION PLUNGED INTO DEBT

29/01/2010

The recession may be ‘over’, but for thousands of middle class families it is the beginning of a new era of debt
The debt collection industry is warning of a sudden surge in ‘new’ middle-class debtors as the full impact of the recession is realised.

The return of 17.5% VAT, for many, the end of their fixed rate mortgages, and likelihood of increasing interest rates will serve to make what is already a difficult situation virtually impossible for a growing number of people unaccustomed to being in debt.

The warning comes from the Credit Services Association (CSA) who has noted a sharp increase in the volume of debt coming from sections of the public not previously associated with financial distress. And it believes the situation will get worse as CSA President Roger Lucas explains:

“Despite the recession, many individuals have managed to cut their cloth according to their means, but they are fast running out of cloth. It is no single issue but rather the cumulative effect of a number of challenges that will prove the tipping point to plunge a new generation into debt.”

Of particular concern is news that many of the fixed rate mortgages that homeowners have come to enjoy are coming to an end, just at the point that interest rates look set to rise:

“There have already been warnings about homeowners being caught out with new mortgages and having to resort to credit cards to make payments,” he says. “Unfortunately this is storing up trouble for later, and our Members are beginning to see the first signs of it already.”

The CSA recommends that anyone who finds themselves in debt acts promptly by contacting their lender. “By the time a debt is passed to one of our Members to collect, the debtor has already ignored several previous attempts by the lender to make contact,” Roger continues.

It also recommends contacting one of the approved consumer advice bodies such as Citizens Advice, the Consumer Credit Counselling Service or Christians against Poverty.