Middle-class workers and high earners are suffering with their debt management problems at a similar rate to those on lower incomes according to leading debt advice experts.
With the withdrawal of many credit lines and tighter lending conditions, even those who earn decent salaries are struggling to find loans in the credit crunch.
Many who have lived beyond their means for too long have now found that the rug is being pulled from beneath them as lenders don’t extend credit, and they are left with mounting debt problems that they can’t consolidate with other loans.
In most cases, the high earners are not in difficulty due to losing their jobs, but by simply overspending and racking up thousands of pounds on overdrafts, personal loans and credit card debts that they can no longer afford the monthly payments on.
A spokesperson form one debt advice charity, that has 75% of their offices in more affluent areas of the country, said: “I find it scary how people on £50,000 or £60,000 a year can get themselves in such a pickle. They have lifestyle expectations and because they are on largish incomes, they have never felt the need to budget.”
One adviser even commented that a client had complained about the performance of their daughter’s polo pony.
Ivan Cooper, Chairman at debt management specialists Chiltern, said: “Even those earning £50,000 a year or more need to budget so they know how much money they have each month to spend.
“By speaking to an impartial adviser, many debt problems could be solved and a suitable repayment plan can be arranged – without the need to borrow more.”
Reputable debt advice organisations include Hamilton Locke, The Debt People and Chiltern. These offer a number of different debt help programmes that can assist those struggling to get out of debt.
In many cases, simple debt advice is all that is needed to relieve debt problems, but in some circumstances a professional debt management programme may be required.
These include informal Debt Management Plans (DMPs), Individual Voluntary Arrangements (IVAs) and Trust Deeds amongst others.
A Debt Management Plan (DMP) offers a flexible way for multiple unsecured debts to be repayed with just a single monthly payment. The arrangement is flexible as the monthly payment can be altered according to your changing financial situation.
It is also calculated to be affordable as the monthly payment is based on how much “disposable income” is available once priority payments have been accounted for – i.e. mortgage/rent, food, council tax etc.
The single monthly payment is paid to your debt management provider who distributes it on a pro rata basis to the peopl eyou owe money to.
Payments towards your debts are then rescheduled over a longer period of time to make them more affordable.
An IVA is similar to a Debt Management Plan, but is repaid over a fixed period of time – which is normally within five years. After this time all remaining unsecured debts are effectively written off.
For immediate debt advice, or for further information on Debt Management Plans and other debt help solutions, please call the number at the top of this page.