Tagged: payday loan companies

Rise in North East paupers’ funerals a ‘stark’ reminder of the impact of austerity

The rise in paupers’ funerals and their spiralling cost to councils has been branded a ‘stark’ reminder of austerity on Tyneside.

Local authorities forked out 78% more on funerals for families who don’t have the money to bury their loved ones themselves in the two latest financial years, compared to the two years leading up to the 2010 General Election.

One authority faced a 100% increase in how much they paid out to cover funerals, either in full or as a contribution to costs.

Emma Lewell-Buck, the MP for South Shields who is asking the Government to review the national funeral payments system, said:

“Funeral poverty is often overlooked, but at a time when incomes are falling and cruel welfare reforms are hitting hard the added cost of a funeral can have a devastating effect on families.

“It is little wonder families are turning to their Local Authority or getting into debt, it is crucial that the plight of so many is highlighted and a swift resolution brought to this heart-wrenching poverty.”

A complex web of factors are said to behind the current number of council-funded funerals – officially known as public health funerals – and associated costs.

Meanwhile, charities are striving to maintain dignity for families and help people stay out of debt.

Heather Kennedy, funeral poverty officer with Quaker Social Action, said:

“The figures are stark. There is still a perception that a public health funeral amounts to a ‘paupers’ funeral’ but this can get in the way of real grieving processes.

“It can be really hard but some people are just so relieved that they will be able to have some sort of service after all that they are happy with anything.”

Families can apply for part-funding from the council to cover funeral bills, and the council will also meet the full cost when a person dies with no family able to pay when the deceased’s estate does not cover the fees.

South Tyneside Council has gone from spending £500 on two funerals before the General Election, to 11 funerals costing £7,000 in 2013/14.

County Durham has seen its costs double. While the cost of six funerals and contributions was £3,015 in 2008/09, in 2013/14 it was £7,386.

Newcastle City Council has had to pay out £101,490 on 131 funerals in the past six years – although year on year the number of funerals fluctuates.

The figures reveal costs are rising more than the number of funerals, and in 2008/09 and 2009/10 Newcastle, South Tyneside, County Durham and Sunderland City Council spent £44,965.14 on public health funerals.

In 2012/13 and 2013/14 this figure rose to £80,158.38 while the number of burials has only risen by 32% over the same period.

The average funeral in the UK now costs around £3,466 – an 80% rise in the past ten years.

Ms Kennedy added:

“We see a lot of people who are struggling financially and may be claiming benefits but there are also increasingly more people who are in work.

“So because they are in work they can’t apply for a social fund so when suddenly someone in the family dies they can’t afford it.

“People who weren’t necessarily in debt before can really be floored by this.”

Newcastle City Council buried 17 people in 2008/09, which cost £12,995.00, and in the year 2012/13 this rose to 29 people costing £24,400, while last year there were 21 funerals which cost £20,406.00.

In Sunderland the number of funerals has risen year on year to from six in 2008/09, which cost Sunderland City Council £1,124, to 13 in 2013/14 costing the council £6,423.98.

Emma Lewell-Buck, who has spoken in Parliament on the issue of funeral poverty, has said low-income households have been forced to turn to payday loan companies and sell possessions in order to lay their loved ones to rest.

There is also the fear that an ageing population, funeral cost inflation and rising death rates could mean the problem of unaffordability spirals, with more and more people applying to the council for help.

A South Tyneside Council spokesperson, said:

“It is obviously extremely sad that some people die without any known living relatives to celebrate their lives at their passing.

“Our staff in Bereavement Services work hard to trace relatives of the deceased but sometimes are unable to find anyone.

“When this happens we provide a dignified funeral service giving the due respect everyone deserves at the end of their lives.”

Source – Newcastle Evening Chronicle, 30 Dec 2014

Hidden debt epidemic from pay day loans hits North East teens

Desperate North teens are saddling themselves with payday loan debt with the help of their parents, it is claimed today.

A shock report by Action For Children has unearthed “worrying levels of borrowing” in the region among young people aged from 12 to 18.

Research by the charity reveals one in eight borrowed money from companies and an alarming 41% said they had used a payday loan company.

While it is illegal for anyone aged under 18 to get credit, Newcastle’s Citizens Advice Bureau (CAB) said staff had dealt with cases where parents or guardians had sought payday loans on a youngster’s behalf.

And bureau Chief Executive Shona Alexander said the hidden debt epidemic is leading to relationship breakdown within families as teenagers – the age group most likely to be on a zero hours contract – struggle to repay relatives.

It is a serious problem,” said Shona, who called for the credit age to be raised to 25. “We know that young people have forged the signatures of adults and that they have pressured parents or grandparents into getting a loan for them or being their guarantor.

“When they can’t pay them back, the adult’s credit rating is seriously damaged and then it is not just a debt problem but a relationship problem.

“Young people don’t know how to manage money. Something needs to be done.”

Frontline staff see young people seeking debt money to replace household goods, set up their first home or keep up with pals. High street lenders, including store cards, were used by a third (38%) of those able to get credit, the survey said.

Action For Children said the Government must fund more debt education to stop another generation of young people from a cycle of debt and bad credit.

It comes as the charity publishes its Paying The Price report ahead of Christmas amid fears the expensive festive season could be a trigger.

The report unveils how that 55% of children have not received any financial education.

And of those who had, 87% learnt from parents or carers while just 27% learnt about money at school.

The CAB added its Stockton branch had run a successful service helping to educate young people on the dangers of debt which had now disappeared because of public sector cutbacks.

Shona added aggressive marketing campaigns from payday loan companies were attractive to young people and credit firms were likely to change tack after reforms in 2015 to sell more guarantor-style short-term loans.

“Young people don’t understand interest rates and they don’t get into the regular habit of saving,” she said. “We have really got to start education at primary school age and keep that going. Too much of the debt education that we have is short-term.”

John Egan, Action for Children’s operational director of children’s services, said by becoming bogged down with debt from a young age, countless young people from the region could have their future marred by unemployment and mental health problems as a result.

He said: “High interest products and companies are now far too easy for young people to access.

“Some young people are less likely to have the financial skills they need, they may have to live on a low income or are not in education. They are also not able to learn about money at home or at school where other young people do. Add in baffling financial jargon and a lack of knowledge will dramatically create a vicious circle of debt, increasing the risk of mental health problems and unemployment.

“We cannot afford to let children pay this price because of a simple lack of financial education. They must be equipped with the necessary skills to make informed money decisions to give them a chance of a happy future.”

Source –  Middlesbrough Evening Chronicle,  14 Dec 2014

Beware of the loan sharks

Payday loan sharks have trapped an increasing number of Brits into unmanageable debts and new research has revealed that this problem is increasingly getting worse.

In fact, a new report from the charity StepChange showed that the number of people seeking relief from payday lenders has shot up by 82 per cent.

Worryingly most of those vulnerable people seeking help had racked up thousands of pounds worth of debt after taking out more than one loan.

According to StepChange, people seeking advice in 2013 held an average of three payday loans, but at least 13,800 had five or more. The average debt was £1,647, significantly more than the average person’s monthly income of £1,381.

Many people make the mistake of taking out a payday loan believing that it is “easy money”.

However, payday loan companies are little more than legalised loan sharks that prey on vulnerable and low-income people and trap them into a cycle of debt that they cannot get rid of.

Many firms such as Wonga charge annual percentage rates (APR) of 4214%. To put it in layman’s terms and get an idea of just how quickly debt can balloon out of control, if you took out a loan of £3000 at 20 per cent APR (way below the average) and made the minimum repayment of two per cent or £5 per month, it would take you a whopping 90 years to pay it all back.

That is just at 20 per cent APR. Not at 4214% which was correct at the time this story went to print.

Now it is worth noting that the Financial Conduct Authority (FCA) assumes responsibility for the regulation of consumer credit in April.

Mike O’Connor, Chief Executive of StepChange Debt Charity, said that he hopes the FCA will address some of these issues.

He added: “The widespread harm and misery caused by payday loans continue unabated. The industry has failed to address the problems causing untold misery and damage to financially vulnerable consumers across the UK”.
“We hope the FCA’s proposals will address some of the areas of consumer detriment, but on issues such as affordability checking, rollover and repeat borrowing, there is an urgent need for even more radical reform”.

Unfortunately that seems unlikely, when you consider the corporate interests in maintaining high debt levels.

In fact, the StepChange charity highlighted the case of one man whose original £200 debt grew to £1,851 in just three months, thanks to inflated interest rates.

And this highlights an important problem. Most people simply do not realise just how rapidly their debts can run into the thousands before they take out a loan.

Fewer people realise that payday loan firms such as Wonga have previously advised the government on how to deal with consumer debt in the UK.

This essentially means that the government is working alongside those very companies who help to trap people into debt in the first place.

Further research conducted by YouGov for StepChange Debt Charity found that at least 26.3 million people had been offered high-interest credit such as payday loans via unsolicited marketing calls or texts.

These are often taken up by vulnerable, or desperate people who are uneducated about the high costs of loans.

And in most schools across the UK, financial management is not part of the curriculum.

Therefore, if you are struggling with money problems, avoid payday loan companies at all costs. It is better to speak to an independent charity or financial advisor who will offer help and advice for free and advise you on ways that you can make your budget go further.

> Or credit unions.

Source –  Akashic Times,  28 Feb 2014