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“Working Poor” Numbers are Set to Explode

28th December 2010

Amidst the media reports of increasing unemployment and future public sector job losses, it’s easily forgotten that millions of working families live beneath the accepted poverty line. A recent assessment shows 2.1 million working-families are now living below the poverty line, with the Institute of Fiscal Studies warning that this number is likely to rise to 3.1 million families by 2014.

Stagnant wage inflation, growing energy costs and an increase in VAT in the near future is putting enormous pressure on the disposable income of many working families.

Fears are growing that many such families will resort to high-cost borrowing, especially as traditional sources of lending from the banks remain unavailable to growing numbers of people. These fears have led to an MP putting forward a Bill to be heard in Parliament in 2011 which would force a levy onto credit card providers that would be used to fund debt advice. 200 MP’s are reported to support a cap being placed on the amount of interest that high-cost lenders can charge.

The numbers of emergency pay-outs being provided by Job Centres have trebled within the past five years with 3.6 million such loans being made in the past 12 months. Job Centres are also due to be handing out food vouchers where the need exists throughout the UK by April 2011. This illustrates in stark terms the serious level of financial distress now running through parts of society.

One debt charity is warning that the UK is on the verge of a consumer debt national emergency. If mortgage interest rates were to rise they forecast that one in ten British households may find themselves in serious debt.

This worrying set of predictions and statistics is fuelling fears of an explosion in the numbers of people seeking debt advice or entering protected trust deeds in early 2011. Credit card bills from Christmas are due to start arriving from around 17th January, which is the third Monday in January. This day has been described in the media as being “the most depressing day of the year”. The fear is that many people will accept at this point that financially they can no longer cope and seek other options to deal with their debts.

Trust deed numbers have actually been in decline during 2010, confounding the predictions of many experts. However it now appears that the use of credit, and especially high costs sources of credit, is once again on the increase as families otherwise cannot afford the unusually high costs associated with the Christmas period. Along with the squeeze in disposable income being experienced by so many millions of families trust deeds and other debt solutions appear set to increase in number considerably in 2011.

A range of debt solutions exist to help working families that find they cannot any longer keep up with their debt repayments. These include a protected trust deed, bankruptcy, debt management plans or the Debt Arrangement Scheme. Trust-Deed .co.uk provides information on all of these debt solutions as well as real expert advice from a panel of trust deed company representatives. A trust deed is a serious step to take and therefore seeking out as much information and advice as possible is important rather than to jump at the first source of help.

 

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