Debt Problems
Study finds debt problems and inflation now affecting children
A new study conducted by Santander has revealed that parents who are experiencing inflation and debt problems may be passing on some of their money worries to their children.
The bank’s researchers found that in the last three years, half of the children aged between 10 and 16 that were included in the study have had the way they receive their pocket money changed. They found that as parents struggle with debt management problems, their children’s pocket money has been stopped, reduced or given only as a reward for completing household chores.
Another problem, one which Santander calls ‘kidflation’, is that the things that children tend to buy with their pocket money have gone up in price by a considerable amount. Overall in the last three years, the goods youngsters tend to spend their money on have risen in price by 68 per cent more than the Retail Price Index (RPI) rate.
Things such as soft drinks, sweets, toys and clothes have all risen in price, as has the cost of many entertainment and recreation activities. The soa
5m households risking debt problems by not saving enough
A new report commissioned by the Consumer Credit Counselling Service (CCCS) has revealed that more than five million households in the UK are not saving enough to avoid future debt problems should the unexpected happen.
The research, which was carried out by the Financial Inclusion Centre, identified 1.1 million UK households which had less than £1,000 in savings and more worryingly, a total of 4.3 million families which had no savings at all.
The main worry for these households is if the unexpected should occur, such as one household member losing their job. Without savings for situations like this, or for any other sudden expenditure, families could find themselves facing serious debt problems.
The Department for Business, Innovation and Skills (BIS) recently found that 27 per cent of UK households with no savings risk debt management problems in the future by relying on credit for everyday spending. This was compared to just 9 per cent of households which had savings of between £1,000 and £10,000.
Charity warns that unemployment is trigger for more debt problems
The national charity known as the Money Advice Trust has warned that hundreds of thousands of people in the UK could be struggling with debt problems as a near direct result of unemployment.
Researchers found that as many as 185,000 people are struggling with debt problems and money worries in the current economic climate. Even more worryingly, however, they found over 70,000 young people (those aged between 16 and 24) who may soon be facing financial hardship as they struggle to find work or have been out of work for an extended period.
Joanna Elson OBE, who is the chief executive of the charity, spoke to the Think Money website about the self-perpetuating problem of debt problems and unemployment in the UK. She said:
Becoming unemployed is often the trigger for debt problems. Increasing levels of unemployment will undoubtedly bring greater financial hardship to homes across the UK.
The figures show that in the three months running up to August 114,000 more people became unemployed.
Risk of debt problems as 1 in 10 households can’t afford monthly costs
A recent survey has found that an average of one in ten households in the UK can’t actually afford their monthly living costs, which could leave them at risk of experiencing debt problems.
Researchers from Lloyds bank conducted a survey of its current account customers, to work out how much they were spending each month compared to their income. What they found was quite worrying, as 10 per cent were not bringing in enough to cover living expenses such as rent and mortgage payments, food shopping, energy and utility bills etc.
A financial solutions professional from Think Money commented on the situation and offered some advice for those in need of debt help:
Its worrying that 10% of people should be struggling with their finances in general, let alone find themselves unable to meet their monthly outgoings. Its clear that many of those people will be falling into arrears or getting into debt just trying to make ends meet. <
Banks must do more to help people with mortgage debt problems
The head of the Central Bank of Ireland has said that banking organisations need to do more to help people in the country who are struggling with mortgage debt problems.
Governor Patrick Honohan warned that many people in Ireland are living under the threat of losing their homes, and banks have a responsibility to manage this arrears situation so that this doesn’t happen. He criticised some financial organisations, saying that they were behind the curve when it comes to tackling the worsening debt problems in the country.
Mr Honohan said that although some banks are writing down debt, a total blanket forgiveness scheme is not the answer. Instead, he insisted that people suffering with mortgage debt problems should be given the option of renting their homes rather than facing repossession.
The governor also said that he would consider the use of a debt settlement agency to be a viable option, in order to give borrowers a more reasonable and efficient way to resolve their debt problems. H
Tradesmen given 3 weeks to face up to tax debt problems
HM Revenue and Customs (HMRC) has reportedly given UK tradesmen who owe money to the department just less than three weeks to face up to their tax debt problems and declare their earnings.
For the last few months, HMRC officers have pursued a targeted investigation into plumbers, heating engineer and plumbers who have been moonlighting (working for cash in hand payment and not paying tax).
The department began its investigation by sending out around 50,000 letters to tradesmen reminding them to declare all earnings and warning them of serious consequences if they tried to avoid paying income tax. This led to raids in different parts of the UK and more than 500 investigations, some involving tradesmen who owed up to £150,000 in unpaid tax.
HMRC is offered plumbers, gas fitters and heating engineers a kind of tax amnesty, called the Plumbers Tax Safe Plan.