UK: 6.7m people facing financial crisis

A record number of 6.7 million individuals in Britain are grappling with financial hardship, according to assertions made by a campaign group, as the soaring cost of living plunges more households into debt. Research conducted for Debt Justice revealed that 13% of adults had fallen behind on three or more credit or bill payments over the past six months. This percentage surged to 29% among 18- to 24-year-olds and a quarter of 25- to 34-year-olds.

These claims find support in data from charities, which have observed a sharp rise in requests for assistance with problematic debts, as well as in official figures released on Friday showing an uptick in the number of people declaring insolvency. Crosslight Advice, a charity offering debt and money advice in London and the south-east of England, reported a 20% increase in inquiries during the first two months of 2024 compared to the same period last year, highlighting the growing demand from individuals struggling to manage their finances.

While some expenses like energy bills have decreased from their peak levels, rents and mortgages remain significantly higher than pre-crisis levels, straining household budgets. The latest statistics from the Insolvency Service indicate that 10,136 individuals entered insolvency in February, marking a 23% increase compared to the same month last year. Among these cases, 709 were bankruptcies, 6,420 were individual voluntary arrangements (IVAs), where individuals negotiate to repay some of their debts with a portion often written off, and 3,007 were debt relief orders (DROs), aimed at those with debts under £30,000 and savings below £2,000.

In response to these challenges, the chancellor announced in the recent budget that the £90 charge for a DRO would be eliminated from April 6 to make them more accessible. Debt Justice is advocating for all political parties to pledge assistance to individuals overwhelmed by unmanageable debt, providing them with protection against harassment by debt collectors. Their Together Against Debt manifesto, launched during Debt Awareness Week, proposes various measures to safeguard consumers, including imposing a legal duty of care on local authorities and government departments pursuing debts.

Joe Cox, a senior policy officer for Debt Justice, emphasized that the household debt crisis is deepening and urged for political leadership to address it effectively. Meanwhile, Bruce Connell, Crosslight Advice’s chief executive, underscored the alarming reality that a substantial number of people are facing dire financial situations, with nearly half of those seeking assistance having to reduce or forgo food due to financial pressures. He emphasized the importance of Debt Awareness Week in spotlighting available support and the necessity of services like theirs during these challenging times.

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