Consumer Debt Averages £132 for Energy Bills

Energy Consumer Debt Hits £132

Energy consumers in debt to their suppliers now owe on average £132 - 5% more than last year, according to a study conducted by uSwitch.

Research shows that, of those in debt, 41% now owe more than they did this time last year while 17% said they owed less.

However, the poll for comparison website uSwitch found the number of UK households owing money has dropped from 6.5 million last year to 5.5 million - or 21%.

The figures follow recent gas price-cuts across the industry due to falling wholesale prices.

USwitch reported household energy bills rocketed by 42% (£381) in 2008 but fell by just 4% (£54) in 2009. Price cuts so far this year average out at 4% (estimated £45).

According to uSwitch, it is predicted that the average household bill will be £1,209 a year once the cuts come into effect - this is still £297 or 33% higher than at the beginning of 2008.

Payplan

If you owe money towards your monthly utility bills and are worried about debt, contact Payplan today for free, confidential advice.

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Growth in Inflation Due to VAT Rate Returned to 17.5%

Increase in VAT Rate Leads to Record CPI Growth?

The Office for National Statistics (ONS) yesterday released records of the highest Consumer Price Index (CPI) annual inflation rate for over a year.

The ONS revealed that the UK CPI annual Inflation rate increased to 3.5% in January 2010, a 0.6% rise from 2.9% in December 2009, the second largest ever increase in the annual rate between two months.

This record monthly movement is thought mainly to be due to the increased standard rate of Value Added Tax (VAT) from 15% to 17.5% in January 2010.

Fuel Costs

A further contribution to the recent increase in inflation between December and January came from transport as fuels and lubricant prices rose this year by 2.2%, a record rate of growth compared with a fall of 3.4% a year ago.

Retail Prices Index Affected by Increase

The recent increase in VAT also lead to the strongest Retail Prices Index (RPI) monthly improvement for a December to January period for over 10 years since 1997, with the RPI remaining at the same level.

The last time the RPI had positive growth between December and January was in 1991 when an increase of 0.2% was recorded.

Payplan

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Increased Protection for Debtors from Charging Orders

Greater Protection Given to Those Who May Lose Their Homes

A recent consultation by The Ministry of Justice is considering setting a minimum amount of debt before a court can order the sale of a debtor’s home.

People who face losing their homes because of debts on credit cards or loans could get greater protection from charging orders if the amount is agreed.

Current Law allows a lender to force debtors, in extreme cases, to sell their homes if they fall behind on payments, this is known as a ‘charging order‘ against a person’s property.

Justice Minister Bridget Prentice Said:

‘We know that only a small proportion of charging orders result in the property being sold, so it’s rare for a debtor to lose their home because of things such as unpaid credit cards…But it’s important that the government consider whether there is a risk that the numbers will increase due to the current situation, and whether this could result in more people losing their homes because of relatively low levels of debt which they are unable to pay.’

The consultation which closes on 30th April 2010, asks whether a minimum level of consumer credit debt should be set in law before an order for sale can be issued.

Payplan

If you are worried about charging orders or falling behind on your monthly payments, contact Payplan today for free, confidential debt advice.

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Debt Help Sought By Over Sixteen Thousand In January

Calls to debt helpline indicate recession is far from over

Following today’s publication of the insolvency figures for quarter four of 2009, Payplan, the free debt solutions service, has revealed that calls to its debt helpline totalled over sixteen thousand in January alone.

John Fairhurst, managing director at Payplan, said:

“Although official figures tell us that the UK is emerging from recession, we know from the experiences of those people we help that the effects of the economic downturn are still being felt by vast numbers of Britons.

“We were contacted by more than sixteen thousand people in January this year, who are seriously concerned by their debts. Worryingly, there will be many more individuals who have not yet sought help - the longer the debt is ignored the worse the problem will become.”

Today’s figures from The Insolvency Service reveal that more than 35,574 people were declared insolvent in the last quarter of 2009, an increase of 24.9% on the same period last year.

Of those individuals made insolvent over the three months to December, 17,007 people were declared bankrupt and 13,219 entered into an individual voluntary arrangement (IVA) with their creditors, while the remaining 5,348 signed up to the Government’s new Debt Relief Orders.

Notes to Editors

For further information please contact:

Payplan Press Office
Jayne Newton
jayne.newton@payplan.com
01476 541980 or 07812 736861

Debt Relief Orders

A Debt Relief Order is a cheaper form of bankruptcy for people on low incomes. Introduced in April 2009, they allow those with debts of less than £15,000 and assets of less than £300 to declare themselves bankrupt for a fee of £90, rather than the usual £510.

About Payplan

Payplan is a free debt advice and solutions service that provides impartial advice to people in financial distress. Payplan helps over 100,000 people every year and works closely with organisations in the field of money advice and consumer and employee welfare.

Payplan’s freephone debt helpline is open six days a week, call 0800 280 2816 to speak with an experienced debt adviser. Lines are open 8am to 9pm Monday to Friday and 9am to 3pm on Saturdays. Alternatively visit www.payplan.com.

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