We are a nation of debtors - 18 December 2003

We are a nation of debtors - and not only at Christmas. That’s official: according to a recent study, each of us owes, on average £5300, excluding mortgage payments. My immediate reaction to that figure when it came out was that someone, somewhere must owe an awful lot of money. In truth, most of us probably have debts far lower than the ‘average’ level, but that doesn’t make the overall picture any better.

More than a few people have come to see me at my constituency surgery facing crippling problems associated with debts far smaller than £5000 - perhaps a few hundred pounds. They may have borrowed it to fend off a short term crisis, and then they are caught. Perhaps their incomes do not allow effective repayment of often high rates of interest, or they may have borrowed several smaller amounts and the creditors are pressing. They may then have gone to one of the firms that offer to ‘consolidate’ debts for one payment- – but then they are worse off than before. They may have staved off the immediate threat, but the often punitive rates of interest charged for ‘consolidation’ means that the debts just spiral further upwards. I have even heard recently of some such companies issuing captive debtors with (dubiously legal) coupons to use at selected shops so that they may buy basic food and household items - at the cost of course of further debt and higher interest. The irony is, all along, that reputable companies will often agree to a managed programme of repayment at lower interest and management payments, if only they are approached to discuss the problem.

There are many people in our city in this position, desperate to find a way out but with no clear idea of where to turn. The citizens Advice Bureau in the City runs an excellent debt counselling service, but they are overwhelmed. Other organisations in the City, such as SCRATCH provide assistance to people who are near destitute through debt, but important though that help is, it doesn’t start to resolve the problem of the debt itself. People who are in debt, and want to get out of it need help and support to negotiate with their creditors, and to plan their finances so that outgoings balance income often a long hard slog needing support and advice over an extended period of time.

I think we need additional resources in Southampton to provide that help. After Christmas, I will be looking to see what we can do between us, in Southampton to set up that additional long term help such as sit down advice, phone in support, and negotiation facilities. Perhaps our local and regional banks might like to help with some financial support?

What do you think about this - email me and let me know