Benefits Overpayment Causes Low-Income Families to Look to Debt Consolidation, say Baines & Ernst

MANCHESTER, England, March 26, 2010 - Low-income families are being forced to pay back GBP 1.85bn after the
government made overpayments to 1.6 million people through the benefits
system. It is believed that thousands of people, many of whom are already in
debt, will have to seek financial assistance in the way of debt consolidation
and even bankruptcy (www.bainesandernst.co.uk/bankruptcy/).

A Commons spending committee report states that 50,000 people owe between
GBP 5 and GBP 10k, 23,000 owe GBP 10k- GBP 20k and over 8 and a half thousand
owe more than GBP 20k after the government made a catalogue of errors in the
payments system.

Debt consolidation (www.bainesandernst.co.uk/) firm Baines & Ernst
say it will cause huge problems for low-income families. A spokesperson for
the firm said, "This level of debt will prove almost insurmountable for
people who are already struggling. The most worrying aspect, particularly for
those in the GBP 20k+ bracket, is the real possibility that the government
will sell the debt off to the private sector, which could pose a threat to
the safety of customers from debt collectors and bailiffs. It's imperative
that safeguards are put in place to protect vulnerable families who, after
all, are unwitting victims of government mistakes."

The committee found that the government has actually improved it's
identification of overpayments, suggesting that millions have gone
unaccounted for in the past. In 2007-2008, GBP 9.3million in small
overpayments was written off as too small an amount to make a retrieval
program worthwhile.

Most of the errors involved a failure to reduce claimants' benefit
payments following an earnings increase. Hundreds of thousands of people
experienced more than one error in their benefits payments. Detractors say
it's a sign that the government's current benefits system simply isn't
working.

The Baines & Ernst spokesperson continues: "The fact that so many people
fell prey to multiple errors is indicative of the sheer scale of the problem.
The government simply doesn't have a mechanism for assessing the level of
repayment that people can afford, which leaves the process open to abuse. The
best thing for those who have fallen foul of overpayments and find themselves
struggling to pay back large sums of money is to seek debt help. For people
with other debts as well, it may be prudent to opt for debt consolidation."

About Baines & Ernst

For over a decade, Baines & Ernst has been working to help people to live
a life free from debt. With Debt Management Plans (DMPs) we have helped tens
of thousands of people change their lives. The DMP is an informal arrangement
between your client and their creditors, and we will use our unrivalled
experience to negotiate the best deal for your clients.

www.bainesandernst.co.uk/

Contact Details: Nick Pearson, Director of External Affairs, +44-(0)161-216-8107, Paymex Group, Lloyds House, 18-22 Lloyd Street, Manchester, M2 5BE