Debt and Relationships During the Credit Crunch

Debt and Relationships – Are Couples Really Staying Together to Protect their Finances?

Is the Credit Crunch Saving Couples\' Relationships?Whilst the world’s leading economies debate how they can help shore up some of its biggest and influential financial institutions, according to a recent poll by Cahoot, the Credit Crunch and resulting economic unrest is more likely to encourage couples to stay together to weather the storm.

The poll taken by the Cahoot online bank (a division of Abbey National plc) suggests that 30% of men and 25% of women were ‘less likely’ to separate due to the Credit Crunch, on the understanding that living together allows for economies of scale and generally costs less.

However, this may not be the reality.

Recently released UK divorce figures (for 2007) from the Office for National Statistics (ONS) may well show the lowest recorded levels of divorce in 26 years, but with the effects of the Credit Crunch expected to last for at least another two years by many financial commentators, these figures may not reveal the true extent, for married couples at least, of how the Credit Crunch is affecting people’s relationships.

The Reality of Debt and Relationships

Credit Crunch, Debt and Relationships

Matthew Timms, Cahoot’s Managing Director, commented on the poll by saying “there are clearly economic benefits to being in a relationship, such as shared bills, lower rent and even reduced car insurance premiums.”

Whilst this is undoubtedly true, as is the fact singles may pay more for their living costs, what the poll doesn’t appear to establish is whether or not those taking part in the survey already had relationship problems - it’s highly unlikely that the whole truth behind the Credit Crunch and its effect on the complex issues of debt and relationships has revealed itself just yet.

Where to Get Help with Debt and Relationship Problems

Many debt problems that Payplan clients face are as a direct result of a marriage or relationship breakdown, but many people in debt come to Payplan who have relationship problems due to their debts and overall financial health - this is very often the root cause of a relationship breakdown.

Relate - Relationship Counselling

There are several organisations that can offer help and support for relationships that breakdown because of debt and other causes. One such organisation is Relate, who offer relationship counselling across the UK:

Relate – Relationship Counselling

Relate Scotland – Relationship Counselling for Scottish Residents

Debt Help from Payplan

If you are in a relationship which is suffering because of the stress of debt, then Payplan can offer free debt solutions and advice. Call Payplan confidentially for free on 0800 280 2816 or alternatively submit your debt problem online.

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Justabank Helps Payplan Clients Save Money Amidst Financial Turmoil

Volatile and Unpredictable - A Week of Financial Turmoil

The last seven days have been some of the most volatile, unpredictable and potentially damaging to the world’s economy for several decades.

Lloyds TSB Buys HBOS

In the UK alone, the financial problems of its largest mortgage lender HBOS has prompted a massive takeover deal worth £12.2 billion by Lloyds TSB.

UK Mortgage lending has itself recorded a 36% drop compared with August last year, according to the Council of Mortgage Lenders (CML). And worldwide, the collapse of Lehman Brothers, and the problems facing large investment and insurance companies like Merrill Lynch and AIG have led to fears of financial meltdown across the world’s strongest economies. Many financial commentators are now more nervous than ever about what this means for consumers.

Many UK Families Struggling Financially for Several Years

However, it’s easy to forget that many families in the UK were already financially overstretched, well before the Credit Crunch and recent hikes in food, petrol, gas and electricity prices hit home. Consumer debts such as credit cards had already reached record levels, and many individuals, families and businesses had found themselves with serious debt problems resulting from years of overspending and budget mis-management.

Recent problems - such as rising inflation, rising living costs and rising unemployment - can only add to what was already becoming a problem too big to handle for many in the UK.

Justabank Can Save Clients Money

Justabank can Help Save Payplan Clients Money

Especially at times like these, Payplan believes it’s really important that its clients are given all the tools possible to help them take control of their debts, whether through a free Debt Management Plan (DMP) or an IVA.

This is why Payplan gives all its clients free access to Justabank, a unique online service that allows clients to make and track payments, monitor payment dates and keep an eye on outstanding debts to each and every creditor giving them the confidence that creditors are being paid and their debts are reducing.

Help and Support with Legal Threats

Not only this, Justabank offers further support, information and advice for common situations that can arise when dealing with debt, such as what to do when receiving letters threatening legal action (eg county court judgments or CCJs).

Justabank Can Help Debtors Reduce Their Expenditure

Justabank Can Help Save Debtors Money

Importantly, during this period of economic uncertainty, Justabank also gives clients access to numerous special offers and advice on complimentary products that could save them money on their essential expenditure – these include things such as ensuring that their home and car insurances remain competitive, utility bills such as the phone, gas or electricity are not costing them more than they should and that they can access their money by using the correct kind of bank account for their situation.

It’s really important to Payplan that their clients’ debt solutions succeed, so by helping them save money on their monthly budget in this way, Payplan believe that Justabank can help ease the pressure that dealing with debt can bring.

Through Justabank, clients also have direct contact with their case officers online, allowing them to help and support clients quickly, whilst reassuring them at the times when it’s needed most.

Reassurance, Help & Support - Justabank is free for Payplan clients

Reassurance, help and support – this is what Justabank is for, and what’s more, it’s completely free. If you’d like further information about Justabank, then you can visit Payplan’s website or simply contact a Payplan debt adviser for further details.

Filed Under  Budgeting, Debt News, Financial News  |  1 Comment

Small Debts, Big Problem

Inflation Eating Surplus Income As Small Debts Become A Big Problem

Small Debt Big Problem - Debtors are on the edge.

Indebted homeowners are the hardest hit by rising inflationary costs, reveal Payplan, the UK’s leading provider of free debt solutions. With annual inflation hitting 4.4% in August and expected to rise further with tomorrow’s September announcement, their surplus income has reduced to only £270 a month*.

Using Credit To Pay Mortgage Or Bills

Today the average homeowner calling Payplan for help owes over £40,000 in unsecured debt, compared to the average £27,000 owed by renters. Despite an average household income of £2,200 per month, indebted homeowners are left with an average of only £270 of disposable income a month with which to repay their debts. This is often far below the amount needed to service monthly debt repayments, and before seeking help they will have missed repayments - often to their mortgage lender - or been living on credit. A survey of new callers to Payplan last month showed that 50% had recently used a credit card to pay their mortgage or a utility debt.

Small Debts Now Unmanageable

Juggling credit is less easy as small debts become a big problem

The consequence of having only £270 a month in disposable income means that any inflationary price increases has a catastrophic effect on budgets. Many lines of previously available unsecured credit have been withdrawn in the credit crunch and small debts that were previously dealt with by juggling credit are now becoming unmanageable much faster.

Income Squeezed By Inflation

John Fairhurst, Managing Director of Payplan, commented:

“Homeowners increasingly have to face up to the reality that after living expenses, there isn’t enough money in the kitty to pay off their debts. As lenders become more cautious about providing consumers with credit cards or personal loans, we have found the average levels of unsecured debt dropping. This is not, unfortunately, due to people managing their money better, but simply that even small debts are now proving unmanageable. Rises in inflation mean that surplus incomes are squeezed even tighter, leaving people on the edge tipping over at a faster rate.”

*The surplus income for a household is determined when essentials such as housing, food, medical and transport costs have been deducted.

Payplan Press Office

For further information please contact Jayne Newton at Payplan:

jayne.newton@payplan.com
01476 541980

NOTES TO EDITORS
All figures are internal Payplan numbers.

About Payplan - Payplan provides free, ethical and immediate debt help to over 100,000 people every year, working closely with organisations in the field of money advice and consumer and employee welfare.

Freephone 0800 280 2816 six days a week to speak with an experienced debt adviser. Lines are open 8am to 9pm Monday to Friday and 9am to 3pm on Saturdays. Or submit your debt enquiry online.

Filed Under  Debt News, Financial News, Payplan Press Releases  |  Leave a Comment