Financial aid charity warns on debt levels

Job losses and falling incomes look set to leave rising numbers of households unable to repay their debts, a charity says.
By The Newsroom
Published 15th Mar 2011, 06:00 BST

The Consumer Credit Counselling Service said many families were struggling in the face of falling or stagnating incomes and rising living costs, while in the worst cases people risked losing their job completely.

For those with high debts the situation was often unsustainable, with people facing big gaps between their monthly income and their outgoings.

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The charity warned that families were the most vulnerable, with people who had two children having an average of only £62 a month left to repay debts after meeting all of their essential outgoings.

Families that had three or more children needed £45 a month more than they had coming in just to cover their living costs.

The group said the situation was set to get worse from the start of the new tax year, when the threshold at which the 40 per cent rate of income tax kicks in falls and changes to the tax credits system will be introduced.

Its chairman, Lord Stevenson, said the picture was bleak and it seemed likely that many more families, including better-off ones, would be increasingly likely to be in debt.