Will the end of Furlough and the £20 Universal Credit boost mean a greater rise in debt?
Will the end of Furlough and the £20 boost to Universal Credit lead to greater debt for those on low incomes?
Battens' Debt Recovery Manager Angie Loveless has some timely advice:
Now that the Furlough scheme has ended what does this mean for people who may lose their jobs as a result of this change? Incomes have been hard hit since the beginning of the pandemic. For those in full time employment there was a fall in salary of 19% and for part time workers the fall was 35%. This meant that over a fifth of UK adults were unable to afford or pay for essential household items such as food, heating and lighting, as well as being unable to pay their mortgage or rent. Additionally, approximately one in ten families with children were not able to buy birthday or Christmas presents in the last year.
October also saw the withdrawal of the £20 a week increase to Universal Credit, which had previously been brought in to support low income families during the pandemic. 5.8 million people who had received UC will now see their incomes fall by £1,000 per year. This combined with increasing gas, fuel and food prices, could push an estimated third of households into debt.
Due to these multiple factors, families are likely to slip deeper and deeper into the quagmire of rising debt, with some taking desperate measures by turning to payday loan companies and then paying an extortionate amount of interest on their borrowings.
Credit card providers can often seduce us by offering interest-free offers. These offers are only for a specified period, and if the borrowing is not paid in full by the end of that period then interest will be applied to the amount outstanding, resulting in further debt being incurred.
Buy Now, Pay Later companies encourage us to purchase items on the never-never which again increases the burden of household debt.
Before taking out credit, do your research. Ask yourself: do I really need this item?
If it is an essential need, then before borrowing, speak to all of your creditors to see what they can do to help you – they have a duty to listen and are required to work with individuals to reach an amicable solution.
If the household debt is completely out of control, with creditors not willing to work with you, you may consider applying for a Debt Relief Order, setting up an Individual Voluntary Arrangement or petitioning for your own bankruptcy. These steps may sound extreme and are not for everyone. There are pros and cons attached to these 3 options and those need to be looked at carefully before you take any action.
For further information contact firstname.lastname@example.org or call 01305 216221.