This Christmas could be catastrophic for over six million families who have difficulty meeting debt repayments, the Legal Services Commission warned today.
The LSC, which manages legal aid, is launching an early Debt Awareness Campaign to warn Christmas shoppers to consider the debt they may be racking up ahead of January crunch time when the bills arrive.
The campaign is raising awareness about debt and urging people to control their spending and plan ahead. The message will be delivered through road shows targeting Christmas shoppers in shopping centres, via advice centres and in information leaflets.
Mike Jeacock, director of service delivery at the Legal Services for the Commission, says: “Half of all households with serious debt problems have an annual income of less than 7,500 so Christmas debt can mean a choice between not eating or having the power cut off when the bills arrive in January. It’s difficult to avoid expense at this time of year but tackling debt problems early is the key to staying afloat. The two important messages here are – keep track of your spending and know how much you owe – and if you cannot manage repayments then seek debt advice early. There is much that can be done to avoid eviction or disconnection from utilities.”
A Norwich pensioner couldn’t afford to eat when his creditors pushed for higher monthly payments on his debts worth more than 30,000. He was threatened with a bailiff’s visit when he told two of his creditors there was no way he could increase payments. He lives in sheltered accommodation and has no assets.
He has regained control of his financial situation after getting free civil legal aid from the Legal Services Commission.
The pensioner, who has not been named, says: “I never should have been offered so much credit. I can’t afford it. I didn’t find my eye-glasses and I didn’t read the small print. I took the loans the bank offered me because Christmas is an expensive time. I have dozens of grandchildren and I want to treat them all the same. When I finally called my advisor I was actually frightened and upset.
My creditors were pushing me for higher and higher payments, sending threatening letters – and on my pension there was no way. I couldn’t afford it. I’d already sent them my electricity money. I would recommend my adviser to anyone. She talked to everyone I owed money to and my bills came down to a fair level. I am on top of it now.”
The LSC Debt Doctor has put together some simple pointers to help people avoid the financial hangover of the festive season.
It suggests using credit or catalogues can be a good way of spreading the cost of Christmas but you don’t want to be paying for this Christmas this time next year. Don’t take on more repayments than you can afford in full within the next few months. And don’t be tempted to keep buying more, set a budget and stick to it.
The LSC also says gas prices have gone up this year so make sure you budget accordingly. If you are on benefits or over 60 you may be eligible for help with your fuel bill. You might also be able to get a grant to help pay for heating and insulation improvements.
Make sure you know the penalties you might incur if you fail to pay your credit card bill. You could consider switching your balance to a 0% interest deal.
If you are having problems paying, let creditors know. They may be able to extend the time you have to pay.
If you find yourself in debt problems get advice. Don’t let the bills mount up unopened. The earlier you get help, the easier and less stressful it will be.
The Commission is encouraging people to access the help they need if they do find themselves with debt problems. Advisers can negotiate with creditors, check a client’s financial situation and draw up a programme of reduced payments.