Debt charity can't help third of applicants in trouble

A RECORD number of people contacted a debt charity during 2009 but in a third of cases their financial situation was so dire they could not be helped, research shows today.

The Consumer Credit Counselling Service (CCCS) said its helpline received 335,323 calls during the year, 25 per cent more than in 2008.

A further 150,000 people also sought help online, nearly two-thirds more than a year earlier and double the number for 2007.

But the charity said only a quarter of the people who applied for help had the means to go on to a debt repayment plan or take out an Individual Voluntary Arrangement, under which regular repayments are made to creditors.

An increasing number of people were not even able to meet their daily living costs, let alone have income left to repay debts.

Overall, around a third of the people seen by the charity did not have enough income to enter into a repayment plan and also did not qualify for any type of insolvency, including bankruptcy.

As a result, the charity advised them to seek a way of increasing their income, such as taking in a lodger, working longer hours or checking they were claiming all benefits they were entitled to.

The government also announces additional help for struggling borrowers today through two new initiatives to help give breathing space to people no longer able to keep up with repayments due to redundancy, reduced hours or illness.

Under the first initiative, agreed with the British Bankers' Association, lenders who subscribe to the Lending Code will consider freezing or reducing interest on debt for people who suffer a fall in income, while they will also accept "token repayments".

The second initiative, available through the CCCS after Easter, will enable people with at least two unsecured debts to make repayments as low as 1 per debt per month, as long as they take responsibility for the debt.