Even wealthier borrowers are now struggling to repay their loans
August 27, 2008
A recent report has claimed that suffering severe financial difficulty is no longer a problem that affects only low income consumers. The report shows that financial difficulties are now even hitting homeowners living in fairly affluent areas, indicating that the current financial climate is also impacting heavily on the finances of those that would normally be considered to be fairly well off.
Officials claim that debt counsellors and charities are now receiving more calls and enquiries from homeowners in wealthier areas, whereas in the past these agencies and professionals have dealt predominantly with people on low incomes often living in poorer areas and with no assets to speak of. Many wealthier consumers from middle class backgrounds are now struggling to keep up with repayments on loans and debts, according to the report, and are being forced to seek professional advice from debt advisors.
In some fairly wealthy areas of the UK enquiries regarding debt problems have risen by around 100% according to officials from one debt charity called Transact. Figures have not risen by anywhere near this level of poorer areas, according to the charity. Officials say that the global credit crunch has resulted in huge problems in terms of finances, and even those from affluent areas and with decent income levels are now being affected.
An official from the charity recently stated: “In the past it was almost uniquely people on benefits, people in social housing who went to debt advice agencies. Since the credit crunch started, they are seeing a big increase in professional people and homeowners coming to seek help, who have just been pushed over the edge and now can’t cope with their outgoings. These services now with the credit crunch are being overwhelmed by a whole new breed of debtor: middle-class people. But what that means is there is much less debt advice to go round.”
A debt advisor who deals with clients in fairly affluent areas said: “We’ve seen probably almost a 100% increase in clients. This time last year we were really quite quiet.” She went on to state: “I’ve had at least two clients sit in front of me and tell me they would have killed themselves if they hadn’t found out we were here.”
The financial situation in the country that has been fuelled by the global credit crunch appears to be affecting many consumers, and higher borrowing costs have put a real strain on many household finances. This has been further fuelled by a rise in energy prices, which are due to rocket again later this year, soaring food prices, and petrol prices that have hit record highs. It is thought that financial problems for many households are set to get worse, as costs continue to rise, and officials have warned that this situation will be further fuelled by below inflation pay rises.
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