Londoner’s debt problems have become deeper, more widespread and complex since the recession, with creditors acting more aggressively to recover outstanding payments according to an advice group.
The report from Capitalise found that the average debt level amongst people living in the capital was just over £18,000 – up by 16% since January 2007 – and that repossessions of assets increased by 40% between 2007 and 2008.
A spokesperson said: “Creditors are reacting to the debt crisis by passing on more cases to debt collection agencies and resorting to court actions or bailiffs.”
Rather than instructing bailiffs and collectors to steam-in, debt advice organisations suggest that creditors should work with clients to help them get out of debt by guiding them towards informal arrangements.
These allow overstretched individuals to regain control of their finances whilst still repaying their outstanding balances. Debt management plans enable finances to be made simpler and more manageable, as multiple credit payments are gathered into one monthly payment that is calculated based on affordability. This can give people who have overstretched themselves breathing space whilst their finances recover and help avoid further debt problems from developing.
Ivan Cooper, Chairman of the UK’s leading debt management company Chiltern said: “Inner city life in the capital can be difficult for many residents as London is notoriously expensive. Those on a lower-income will find it even harder to manage, and this is where debt help needs to be readily available.
“Reputable debt help organisations, like The Debt People, Hamilton Locke and Chiltern, offer free debt advice to people who are struggling with their finances. They offer a friendly and helpful service, where a free initial assessment can be done.
“A trained adviser can then suggest the most appropriate way for that person to get out of debt, and can recommend ways to reduce expenditure and boost income, which can all help to managing debt problems.”
Other debt management programmes include Individual Voluntary Arrangements (IVAs), Trust Deeds and Consolidation Loans – however, in the current global credit crunch, consolidation loans can be difficult to secure without a flawless credit history.
IVAs work in a similar way to a debt management plan, as multiple outstanding unsecured balances can be gathered into one monthly payment. Unlike a debt management plan though, an IVA is repaid over a set period of time (usually five years). Reputable debt advice organisations (like those mentioned above) will also be able to offer free and impartial IVA advice.
Debt advice organisations report that inner London has a higher need for debt help because its residents suffer more from financial exclusion, but those living in outer London have considerably higher debts. The worst affected London boroughs include Greenwich, Hillingdon, Bexley, Lewisham and Bromley.
For immediate debt advice or for further information on a range of solutions, please call the number at the top of this page.