Emma Lunn, Thursday May 22, 2008
The debt epidemic has spread to the middle classes - and a growing number of lenders are looking to capitalise on people's misery with loans, credit cards and debt management packages that could see you pay thousands of pounds in interest. We uncover the debt dangers - and show you how to avoid them
Britain's debt crisis has extended to the middle classes with experts saying that even affluent people with good jobs are seeking debt advice.
Debt service Transact says debt centres are seeing a new type of client and that agencies in some middle class areas have seen increases of up to 500% in the number of people seeking help.
Their spokesman James Elliott stated that "since the credit crunch started they are seeing a big increase in professional people and homeowners - people who have been pushed over the edge and now can't cope with their outgoings. These services are being overwhelmed by a whole new breed of debtor - middle-class people. But it means there is now much less debt advice to go round."
More people are facing debt problems because household budgets are under increased pressure from higher mortgage costs and bigger bills for energy, petrol, food and other essentials. Furthermore, many families are struggling to repay or refinance debts taken out when obtaining credit was much easier.
The number of people struggling is reflected in official figures. The Ministry of Justice has revealed that the number of homeowners facing repossession rose by a massive 16% in the first three months of the year while the Insolvency Service states there has been a 1.7% increase in personal insolvencies since the fourth quarter of 2007.
The increase in the number of people with debt problems has led to a number of "debt dangers" that may end up pushing borrowers further into debt crises.
