DANGEROUS RISE OF THE ‘DOUBLE DEBTORS’
The number of people falling into debt for a second time has more than tripled in the last year, according to research conducted by free debt advice provider PayPlan.
These people have fallen into debt a second time after having already worked on a debt plan earlier in their life. In the first half of 2015, 2.6 per cent of those referred to a debt solution provider had been in debt before. For the same period in 2016, that figure stood at 11.1 per cent.
“The sharp rise of the so called ‘double debtors’ is very worrying ” said Jane Clack, a financial adviser at PayPlan.
“One in ten people we now speak to have been on a debt plan of some kind before – a trend that has been seen amongst many debt management companies. With this increase in living costs, coupled with the slow growth in wages, it is easy to see why people are struggling with their finances. The problem is when people cannot manage to pay their everyday expenses or have an unexpected income shock and turn to credit to continue their standard of living, rather than knowing how to adjust their budget accordingly.”
This increase follows the news that, over the last year, the Consumer Price Index has risen by 0.5 per cent. This means that the cost of living has increased considerably, with consumer goods and services, such as transportation and food, now carrying a far heftier price tag.
Further research conducted by PayPlan revealed that 52.1 per cent of UK shoppers have no idea of their bank balance due to paying on cards and contactless technology, and 39.6 per cent of people pay for items on debit card, followed by 29.8 per cent using credit card.
Commenting on the dangerous habit of overspending, psychologist and counselor at employee assistance and wellbeing provider Validium, Mandy Rutter said:
“There are clearly several problems at play here. While it seems we’re doing a good job of crunching numbers and ridding people of their debt, there are obviously some underlying social issues that need to be addressed to truly solve the debt issue once and for all.
”Spending can be either a practical or psychological habit. Questions need to be asked about the cause of the overspending – whether it’s to cover the essentials, an addiction or to provide short-term relief from loneliness, depression or anxiety. Without identifying the real psychological roots of the debt, it’s likely that that person will spiral back into the same situation time and time again.”
“The government, and those in the debt management industry, must be called upon to do more for people with money problems. A better understanding of how credit works needs to be coming from credit suppliers. More support must also be offered to those most at risk of recurring debt problems, whatever the reason may be.
“If you think you are falling into debt again, it is important to reach out straight away and be honest. Talk to your family, bank, creditors and debt advice providers, as they may be able to provide you support.”
For more information on PayPlan, visit www.payplan.com.