New Figures show Households struggling with “smaller but trickier” debts.

The Money Advice Trust’s new figures show people struggling with “smaller but trickier” debts.

By this, they mean everyday household bills have become a problem for many households.

Household bills becoming problem debts.

Bills such as council tax or other bills payable to the state such as tax credit repayments are increasingly difficult to pay for struggling households.  Recent reports have also said that these types of bills are sometimes more aggressively pursued than other debts.   The use of bailiffs, especially by Local Councils has come under fire.

Highest call levels in 5 years.

The Money Advice Trust have said they estimate more than 189,000 calls will be received by the end of this year.  This is the highest level of demand in 5 years with online and webchat also increasing.

The study revealed that callers are increasingly looking for advice about debts that relate to everyday household bills, such as rent, council tax, utility bills and tax credit repayments.

The charity is expecting a total of more than 189,000 calls by the end of 2018 – its highest level of demand in the past five years, with webchat and online demand also increasing.

While fewer people are now seeking advice with credit cards, loans and overdrafts, more callers’ debts relate to everyday household bills such as council tax, rent and energy.

50% of calls received relate to debts of £5,000 or less, this is up from just 22% in 2008.

The Charity says, this reflects the fact that more people do not have enough money coming in to cover essential spending,

Nearly half of those calling the debt line are now in a ‘budget deficit’ a rise from 27% in 2009 and those falling behind on council tax payments has doubled from 15% in 2008 to 30% in 2018 while 17% have rent arrears, up from 6% 10 years ago. In the same period energy arrears have risen to 14% from 9%.

Nearly half of callers (48 per cent) now have a budget deficit – up from 27 per cent in 2009.

The proportion of callers falling behind on council tax payments has doubled from 15 per cent in 2008 to 30 per cent in 2018 while 17 per cent now have rent arrears, up from six per cent a decade ago. Energy arrears have risen from 9 per cent to 14 per cent in the same period.

Government needs to take steps.

With government agencies recently called “worst in Class” for debt collection tactics the Money Advice Trust is calling on government and regulators to introduce a formal strategy to reduce problem debt, bringing together the relevant departments, agencies and regulators into a single, coherent approach.

The charity says the government must ensure that its planned Breathing Space scheme provides protections for people seeking advice from all types of creditors – including utility companies, local authorities, the Department for Work and Pensions and HMRC.

Joanna Elson, chief executive of the Money Advice Trust, said: “We need to change how we think about problem debt in the UK.”

“Ten years ago, a typical caller was struggling to pay credit cards and personal loans. Today, callers are struggling with smaller but trickier debts, usually on everyday household bills – and often caused by ‘broken budgets’, where the money coming in is simply not enough to cover their essential spending.”

“The government, regulators, creditors and the advice sector need to work together to tackle these new realities. There is some good news with the creation of the new single financial guidance body, plans for a statutory Breathing Space scheme and a renewed focus from creditors on supporting people in vulnerable circumstances.”