The debt merry-go-round is breaking

The debt management advice service, PayPlan, has revealed that last week saw a record number of people seeking debt advice as other refinancing options dry up and the “debt merry-go-round” comes to a juddering halt.

The company revealed that they had received 2,500 calls last week and that many Britons who are having arrears problems are not actually in debt. According to PayPlan, there are currently two types of borrower in arrears: those who have recently been made redundant and are now struggling to keep up with mortgage payments due to loss of income, and those borrowers with credit issues.
 
Managing director of PayPlan, John Fairhurst, has spoken about the new face of debt: “In the past people traditionally would have continued to find credit and refinance.” He said. “They were not living beyond their means and they never missed a payment. But now the debt merry-go-round is breaking and that has to be addressed – debt isn’t all about being in arrears.”
 
Talking about lenders doing more to help borrowers than just “sending a leaflet in the post”, Mr Fairhurst says that brokers play a crucial role in helping people to get into debt management: “The number of decent, prime borrowers who are financially at their limit is simply unknown. Many higher income households will be getting jolts this year as income dries up.”

Article sourced from www.debtmanagementtoday.co.uk 21st January 2009