Still suffering debt nightmare

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MANY Wigan residents are still facing a daily struggle with debt despite the UK’s gradual economic recovery and a fall in the number of people seeking advice, it was claimed today.

Figures released by StepChange Debt Charity show that 543 people in the Wigan area called its helpline for advice in the first half of 2015 with average debts of £11,273.

After they had paid all their essential bills, they had an average of just £5 left each month[.

The figures coincide with StepChange Debt Charity’s new report, Navigating the New Normal, which shows that more than one in five Britons are currently showing at least one sign of financial difficulty and 2.6 million of them are in severe problem debt.

Of those 2.6 million, 73 per cent suffered at least one “income shock” in the last year, such as job loss or a reduction in hours.

The charity says that people on low and middle incomes are particularly at risk after an income shock, with a combination of little to no savings and an unresponsive welfare system leaving them unable to meet their basic costs.

Shocks to their income often see them turn to credit to cope, which makes them 20 times more likely to fall into problem debt.

The report comes after the latest Bank of England figures showed the highest annual increase in borrowing on credit cards and personal loans for nine years, sparking fears of a return towards the high levels of unmanageable credit seen in the lead-up to the financial crisis.

StepChange chief executive Mike O’Connor said: “Everyone faces ups and downs in life, but more than 11 million people in Britain are now experiencing some financial difficulty and a quarter of those are in severe problem debt.

“Wigan is no exception and although the economy is beginning to recover, millions of households remain vulnerable to shocks to their income over the next year and many could find they have no alternative but to turn to credit to cope, which can quickly make the problem much worse.”