Citizens Advice reports 'enormous rise' in debt problems

An advice charity today said it had seen a steep increase in the number of people contacting it about redundancy and debt problems during the first quarter of the year.

Citizens Advice said inquiries about redundancy had soared by 179% during the first three months of the year compared with the same period of 2008, while there was also a 21% jump in people wanting help with debt problems.

The charity said debt remained the biggest issue it dealt with during the 12 months to the end of March, with the group advising on 1.93 million new debt problems during the year, 11% more than during the previous 12 months.

Within this total, there was a 49% jump in enquiries from people struggling with mortgage and loan arrears, while there was also a 19% rise in people who were behind with their fuel bills and a 15% increase in people who were in council tax arrears.

The number of people contacting the charity with questions relating to bankruptcy also rose by 24% to 137,406.

Citizens Advice said on average its clients owed £16,971, and it would take them about 93 years to repay the money at a level that they could afford.

It said the most common reasons people gave for getting into debt were having a low income, over-commitment, having an illness or disability or losing their job.

But others also blamed their situation on irresponsible lending, poor financial skills and increases in the cost of living.

The charity said it had seen a 114% rise in people contacting it about redundancy during the full 12 months, while there was also a 61% jump in enquiries about Job Seekers Allowance.

Overall, the group said it had advised on six million new problems during the year, a 9% increase on the previous 12 months, helping nearly two million people. Its website also received 8.8 million visits during the year.

Citizens Advice received a £10 million funding boost from the Government in the Pre-Budget Report, to enable it to extend opening hours at 85% of its bureaux for 14 months to help meet extra demand during the recession.

David Harker, chief executive of Citizens Advice, said: "These new figures show the human impact of the recession as more people are coming to the Citizens Advice service for help.

"In particular we are seeing an enormous rise in the number of people turning to us for help because they have lost their job, or they are struggling with debts or keeping up with their mortgages.

"A recent funding boost has enabled us to see more clients, and train more advisers but we are expecting to see many more people struggling with severe debt and related problems as the recession continues to take its toll."