Debt advisors face record calls

Leading debt charities said today that the credit crunch combined with five interest rate rises had made the problem this year even more serious.

As shoppers head to the post-Christmas sales in huge numbers, it was reported today that an estimated 34 billion has already been spent on credit cards this month – a 3bn increase on last year.

Charities are also expecting an increase in calls from homeowners worried about making their next mortgage repayment.

A Consumer Credit Counselling Service spokesman said the organisation expected even more calls this year from people concerned they have over stretched financially this Christmas.

He said: "We expect just under 34,000 calls to our helpline in January 2008, five per cent higher than in 2007."

The average debt of a CCCS client is over 30,000, while total credit card debt currently stands at around 65bn.

And Credit Action spokesman Christ Tapp echoed his claims, saying the hangover debt from the festive reason reached way beyond the first few days of the New Year, and that homeowners may be particularly concerned.

He said: "It could certainly be our busiest January and February ever. People are now more concerned about the economy than they have been for a long time.

"The nature of calls might be slightly different. It used to be about unsecured credit, but mortgages are becoming a much bigger problem than they were as rising living costs squeeze homeowners."

Although mortgage lenders have urged homeowners to contact them immediately if they think they are going to fall behind with repayments, it is estimated this year that house repossessions will rise by 50 per cent to 45,000.

Citizen's Advice added its weight to calls for belt-tightening around Christmas, pointing out that this time of year is traditionally gloomy for those with cash concerns.

A spokeswoman said: "We know from experience that there is a seasonal surge of people who come to see us about their debt problems post-Christmas, and we know that the trend in debt inquiries is inexorably upwards. There is no reason to believe that there will be any let up in this trend."

And the debt depression can extend beyond calls to banks and credit organisations.

Groups like the Samaritans say they also expect to be inundated with phone calls from people who feel they can't cope with their financial situation in light of lavish Christmas expenditure.

A spokeswoman for the charity said: "January is a particularly bleak time with credit card bills arriving and the short, dark days."