Friday, 30 May 2014

43% people in North West region struggle to make it to payday

There is a growing personal debt crisis gripping Britain as research shows 2 in 5 Brits struggle to make it to payday and that millions are now taking out payday loans and debt management plans to cope with the cost of living and debt repayment.

The shocking statistic follows news that a debt management firm has ceased trading in the Greater Manchester area. It is thought that Debt Help & Advice Ltd have around 3,000 customers who have a plan with it or its affiliates Primary Business Solutions and First Step Finance and I am advising Wiganers to cease making any payments to the company immediately. This view is echoed by the Regulator, the Financial Conduct Authority (FCA).

Whilst George Osborne may be celebrating, the people of Britain are paying out of their own pockets for this Government’s recovery – with many getting into debt or spending all their rainy day money as a result. Research from R3 shows 43% often struggle to get to payday and that this is due to household bills like energy or rent, or repaying credit cards and payday loans. Many people have no savings and if interest rates rise or rents continue to go up we could see millions of families out on the street or becoming so called zombie debtors- paying just the interest not the capital on their debts – as they stuck in a spiral of debt from which they can never escape.

That’s why it’s vital that we tackle the cowboys making money out of providing debt management advice and the legal loan sharks still profiting from these pressures. As well as action on our energy bills, I’m backing plans to get tough on debt management companies, to make sure people have access to good debt advice and alternative affordable finance.

I am championing the free debt advice services offered by not for profit groups like Citizens Advice, StepChange and the Money Advice Service.

There really is no need to pay to secure a debt management plan. My advice is if you are worried about debt and are finding it difficult to cope financially then seek help from Citizens Advice – it’s free and impartial.

In Parliament, I supported Labour’s amendments to the Consumer Rights Bill to address the fees that debt management companies charge as well as pushing for a levy on payday lenders to pay for debt advice provision.

The R3 Personal Debt Snapshot March 2014 can be viewed here.

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