Thousands of Sunderland children are living in families trapped by debt, a new report says.
The figures, released by The Children’s Society and debt charity StepChange, show a third of households in Wearside are forced to borrow money to pay for essential bills.
More than 5,200 families in the city – 15 per cent of the total – are failing to keep up with household bills and loan repayments.
It means an estimated 7,471 Sunderland children are living in families with problem debt, with each struggling family behind on payments by an average of £1,669.
Across the city, families owe a total of £8,716,944 in bills and loans.
In Durham City and Easington, the problem affects 2,957 families, with 4,970 children, and a total of £4,934,526 is owed in debts.
The charities’ report, The Debt Trap: Exposing the impact of problem debt on children, claims family debt causes youngsters to suffer from worry and anxiety, experience bullying and miss out on essentials.
The Children’s Society chief executive, Matthew Reed, said: “This research exposes the shocking reality of parents lying awake at night worrying and unhappy children going without.
“Many families are feeling the squeeze, and parents struggling on low wages are battling just to pay the bills.”
In Sunderland, Pallion Action Group has seen a surge in requests for debt advice since the welfare reform capped benefits at £26,000, and now helps between 100 and 175 people each month.
Money and debt advisor David Brass said the majority of those he deals with owe money to utility companies or have rent and council tax arrears.
He said: “We don’t see so many with credit cards, store cards and loans anymore. What we are seeing is people who cannot pay their gas or electricity bills.”
Most advice he gives involves identifying priority debts, like rent and council tax, over general credit debts, then working out a budget and sticking to it.
“Luxuries go out the window,” he said. “That means losing your Sky TV and non-essentials like home insurance. They have to try and maximise their income and minimise expenditure.
“As long as they keep a roof over their head and food on the table, that’s our job done. We give food parcels out as well. A loaf of bread can make a big difference to someone who is desperate.”
The centre gives out about 25 food parcels a week through its partnership with Sainsbury’s, Mr Brass said.
He said he would encourage parents to tell children, especially teenagers, about money problems, as muns and dads are often under pressure to buy expensive gadgets or designer clothing.
“Many parents get into debt because they do not want to see their children go without, so it is important that they understand the pressures,” he added.
“Most parents always make sure children are clothed and have school uniforms. There are one or two who really struggle who can’t afford the uniforms.”
The Children’s Society and StepChange are calling on the Government to consider a “breathing space” scheme to give struggling families an extended period of protection from additional charges, further interest and enforcement action.
Also, review whether the protection for children against the harm caused by debt collection is working; provide earlier and wider access to debt support and advice, and impose tighter restrictions on advertising loans to youngsters.
Source – Sunderland Echo, 12 Aug 2014
Hundreds of people in Hartlepool have been forced to plead for help after racking up personal debts worth £7.5m in just a year.
Shocking new figures reveal Hartlepool Citizens’ Advice Bureau supported 1,500 people with debt and money advice over a 12-month period – with the average debt a staggering £16,000.
Worried officials at the Park Road-based CAB say they are very concerned with the high level of personal debt their clients have, some of which is more than £100,000.
Not everyone in money trouble seeks help or advice from the CAB either so the £7.5m figure – which is similar to previous years – is likely to be even higher.
Personal debt includes everything from credit cards, personal loans, pay-day loans, mortgage and rent arrears, council tax arrears, catalogue debts and bank overdrafts.
The figures relate to the period between April 1, 2013 and March 31, 2014. In 2012, the figure was around £8m and worried officials say there has been no “let-up”.
Joe Michna, CAB manager, said: “There has been no let up or reduction in the number of people contacting us with debt related problems.
“The debt levels, given that they are average figures, are concerning.
“While the average debt may be £16,000 excluding mortgages, some clients have debts of well over £50,000 when they contact us.
“We deal with clients who have personal debts of everything from a few thousand through to £100,000.”
Officials say the golden rule for those experiencing money trouble is to seek help or advice early.
The CAB offers two services, a Debt Advice Service and a Money Advice Service, which offers help and support from everything from financial planning to budgeting.
CAB staff aim to re-arrange and improve debt-ridden clients’ financial affairs by gathering information on a client’s indebtedness, confirming household income, alerting clients to other potential sources of income, and identifying priority debts.
Once a full and complete picture of a client’s financial situation has been established, the CAB team can help to identify the most appropriate option for dealing with the particular client circumstances which include self-help support packages, negotiations with client creditors and bankruptcy applications.
The debt and money advice services gave advice and assistance to a combined 1,500 clients.
Mr Michna added: “The golden rule for people who have gotten themselves into debt is to seek advice early.
“We are fortunate in that we can offer two services to local people – a full debt advice service and also a money advice service.
“The money advice service can offer advice on budgeting, financial planning and income maximisation.
“We then have our full debt advice service which offers advice and assistance with debt relief orders, bankruptcy and individual voluntary arrangements as well arranging repayment plans with creditors.”
Source – Hartlepool Mail, 16 July 2014
This article was written by Hilary Osborne, for The Guardian on Sunday 25th May 2014
In the first three months of this year, the charity helped 27,000 people who had fallen behind with council tax bills, a 17% increase on the same period of 2013, and one in five of those reporting debt problems had an arrears issue. The charity said the increase had come in the wake of the abolition of council tax benefit in April 2013, and its replacement with new support from local councils. Levels of help vary from council to council, and as of March this year, 244 out of 325 councils in England required all working-age households to make some contribution, regardless of income.
The first wave of changes drove up the number of council tax arrears cases Citizens Advice dealt with to the point that they overtook problems with credit cards and unsecured personal loans for the first time.
Of those contacting the charity about council tax arrears, 42% were employed and 28% unemployed. The rest were full-time carers, or similar.
Of those seeking help with debt generally, one in five had problems with an unsecured loan and the same proportion had a fuel debt issue. One in six had problems with a credit or store card and 5% were behind on a mortgage or secured loan.
Gillian Guy, chief executive of Citizens Advice, said: “Consumer debts like credit cards and personal loans have traditionally been the most common debt problems that come through our doors, but since the end of council tax benefit we’ve seen council tax arrears problems go through the roof.”
Guy said that for some households, council tax bills were the tipping point that plunged them into debt.
“Last year, more than 90,000 people came to Citizens Advice looking for help with council tax arrears as they struggle in the face of low incomes, rising prices and reduced financial support,”
“As their budgets shrink, local authorities are increasingly stretched, but they must ensure that the resources available for their local council tax support scheme are focused on those who are most in need.”
The areas with the largest proportion of clients with council tax arrears were all outside London, and include Salford near Manchester, Stoke on Trent, Rutland and Redcar & Cleveland.
Local authorities can instruct bailiffs to recover unpaid bills or apply to have payments deducted from wages.
Source – Welfare News Service, 26 May 2014
Government cuts to welfare benefits, rising living costs and stagnating wages are to blame for a ‘huge increase in the numbers of people with council tax arrears’, a leading charity has warned.
According to figures released today (13 March 2014) by the charity Stepchange, 45,561 people approached the charity for help and advice after falling into arrears with council tax payments in the last year, up 77 percent on the previous years total of 25,000. The average council tax debt was £102, the charity claims.
Stepchange says that the figures ‘highlights how the squeeze on household budgets is leaving more people struggling to pay essential living costs’.
StepChange Debt Charity chief executive Mike O’Connor said:
“More and more people are struggling to pay essential household costs. Stagnating incomes, changing work patterns, rising living costs and changes in welfare benefits are a toxic combination. Government, business and charities need to ensure that safety nets and protections are in place to ensure that short-term financial problems do not escalate into problem debt which can blight the lives of individuals, families and whole communities.”
The figures come almost a year after the coalition government scrapped council tax benefit as part of widespread welfare reforms and replaced it with a locally administered Council Tax Reduction support scheme.
Under the new system, many more low-income families – including some in receipt of state benefits – are now expected to contribute toward their council tax bill, the exact amount of which is decided by their local council authority.
Margaret Hodge MP (Labour), Chair of the Public Accounts Committee (PAC), has recently described the change to council tax support as “fundamentally perverse”, after it was revealed that 71 percent of councils were requiring households to make at least a small council tax contribution, regardless of whether they can afford to pay or not.
The PAC also found that some households, now expected to contribute toward council tax as a result of government welfare cuts, were losing as much as 93 pence out of every £1 earned, when combined with a cut in housing benefit and increased income tax and national insurance contributions.
Margaret Hodge said:
“This just goes to show, for some, work simply doesn’t pay under the new scheme. For them, work incentives have actually weakened rather than strengthened – the opposite of what the Government intended.
“Some of those 225,000 people stand to lose 97p for every extra £1 earned – a fundamentally perverse result.”
Stepchange surveyed 845 helpline clients and found that 50 percent had council tax arrears at some point over the past year, while 19 percent claimed that they had been threatened with bailiff action by their local council.
The Charity has also warned that changes to bailiff fees, due to be introduced in April 2014, could see an additional £310 added to a households accumulated council tax arrears every single time a bailiff pays a visit to a person’s home.
Stepchange has urged councils to do more to help people who fall into arrears on their council tax and ‘ensure that vulnerable people do not see their debts inflated through the unnecessary use of bailiffs’
Source – Welfare News Service, 13 March 2014