According to a campaign group, more than 6.7 million people in the UK are in financial difficulty as the cost of living pushes more families into debt.
Rising Insolvency Rates Reflect Growing Financial Difficulty Among UK Adults
According to a Debt Justice poll, 13% of adults failed to make three or more bill or credit payments in the previous six months. Among those aged 18 to 24, this percentage increased to 29%, and among those aged 25 to 34, it was 25%.
The statement is supported by official figures released on Friday that indicate a rise in the number of individuals becoming insolvent and data from charities that show a spike in requests for assistance with problematic debts.
Crosslight Advice, a charity that provides debt and money assistance in London and the south-east of England, reported queries increased by a fifth in the first two months of 2024 compared to the same period last year, indicating a rising need among individuals struggling to make ends meet.
Although energy bills and some other spendings have decreased, rents and mortgages have considerably surged before the crisis and are causing strains to household budgets.
The Insolvency's Services's latest data showed that 10,136 individuals entered insolvency last February, a surge of 23% on a month-to-month comparison with last year.
Among these, more than 700 were bankruptcies, and more than 6,400 were individual voluntary arrangements (IVAs), where people compromise to repay a small portion of their debts but usually benefit from a percentage written off, out of which 3,007 were orders for debt relief (DROs). People with less than £2,000 in reserve and less than £30,000 in debt are the target audience for the latter arrangement.
Call for Political Action to Address the UK's Escalating Household Debt Crisis
The chancellor declared in the most recent budget that he will lower the cost of a DRO by £90 starting on April 6th.
Debt Justice stated that it desired a commitment from all political parties to assist those with overwhelming debt in starting over and to shield them from collection agency harassment.
A number of steps to safeguard consumers were described in a manifesto called Together Against Debt, which was released along with the start of Debt Awareness Week. These included a legal obligation of care for government departments and local authorities that pursue debts.
According to Joe Cox, senior policy officer of Debt Justice, the problem of household debt is growing "ever more entrenched."
“We need to see policies in party manifestos that can match the scale of the UK’s household debt emergency. As millions of people are currently weighed down by debt and under intolerable strain, it is time for some political leadership.”
The cost of living problem has affected everyone in some manner, but Bruce Connell, CEO of Crosslight Advice, said the organization's data served as a reminder that "huge numbers of people are finding themselves in impossible financial situations."
Financial difficulty forced nearly half of the people who reached out to the organization to make cuts or give up food, he stated.
Connell continued: “When you’re in such a situation, it’s hard to see any light at the end of the tunnel, which is why Debt Awareness Week is so important; it’s a chance to highlight the support that is available and a reminder why services such as ours are needed more than ever.”