Debt Issue Heightened by Cost of Living Crisis

By Payplan, PRNE
Monday, May 9, 2011

GRANTHAM, England, May 10, 2011 - The leader of the opposition in the UK, Ed Miliband, has said he believes
that the rising cost of living is causing Britain to head towards a "crisis".
With the coalition government rolling out its programme of cuts to public
services, many people face an ever-increasing struggle to pay off their
personal debts in the age of austerity - a struggle that is laden with
dangers and pitfalls.

In a speech earlier this year, Labour leader Ed Miliband spoke out
against the severity of the government's ongoing cuts, warning that too many
families were being "forced to borrow to finance their living standards."

He told an audience in London: "We should be in no doubt that the global
financial crisis was the product of huge irresponsibility in the banking
sector, as governments around the world failed to regulate as they should
have done.

"But why was there such a demand for cheap credit? Because wages weren't
keeping up with the pressures on families too many were forced to borrow to
finance their living standards. So the squeeze on living standards did not
just unfairly impact on those on low and middle incomes, it also built
instability into the economy."

While many people have vastly reduced their borrowing rates since credit
crunch panic first gripped the nation a few years ago, the average level of
personal debt in the UK still stands at a frighteningly high GBP8,428,
according to figures from the Bank of England. The picture is even worse if
you factor in unsecured personal loans, which take the average personal debt
figure up to GBP16,207.

The total amount of consumer credit lending to UK individuals at the end
of February 2011 was a staggering GBP212 billion, with the growth rate of
consumer credit having grown 0.3 per cent in the previous year to 1.1 per

With a current average of 337 people going bankrupt or being declared
insolvent per day, debt management and debt repayment could not be a more
pertinent issue. So what are the options on the table for those people facing
seemingly insurmountable debt problems?

The proposed solution to debt problems that seems to get the most
publicity on television and in newspaper and magazine adverts is put forward
by debt management companies that charge a fee for their services. It's hard
to find a TV advert break that doesn't feature a company peddling their debt
relief scheme these days, but research by various groups has revealed a
disturbing trend of companies adopting a high-pressure sales pitch, offering
poor advice and charging high rates for their services.

In March, the Daily Mirror newspaper launched a campaign (
that aimed to "stop the debt rogues" by calling for more regulation of the
debt industry.

The campaign's leading statement read: "Last year the industry charged
consumers GBP250 million with many fee-charging firms ripping off their
customers - often promising to pay creditors but keeping the money for

"Enough is enough. The economic downturn is driving the most vulnerable
people towards debt management firms in ever increasing numbers. We can't let
those that abuse the trust placed in them by consumers to get away with it
any longer."

This campaign was backed by the likes of Payplan - a company that offers
free debt solutions, debt consolidation, ( advice and
budgeting assistance for people in difficult financial situations.

Payplan's approach to debt problems is to work with people in financial
difficulty to forge viable debt management plans and Individual Voluntary
Arrangements (IVAs) that are designed to address the very specific problems
of each person.

In the company's own words: "Being in debt and experiencing financial
problems can be stressful. Talking it through with friends, family or
colleagues may not be easy. We're impartial and non-judgemental: most of all,
we are committed to finding a realistic solution that is right for you, your
family and your home."

The Daily Mirror's campaign statement concluded with a decisive call for
a shift away from the unregulated growth of the debt management industry - a
shift that would make the role of companies like Payplan all the more

The statement said: "It's time for action to be taken. Proper regulation
will cost very little to enforce but will save some of the most vulnerable
people in society millions of pounds each year.

"That is why we urge action to properly regulate the industry once and
for all."


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Lizzy Snow, lizzy.snow at

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