Families are being squeezed by debt as prices continue to rise.

Families are being squeezed by debt as prices continue to rise.

As the cost of living rises, a charity has predicted an increase in the number of individuals unable to pay their debt repayments.

Debt counsellors help clients who are in debt to make new arrangements for how much they will pay back each month.

According to one father, doing so restored basic affordability.

Prices are rising at their fastest rate in 30 years, putting further strain on people’s budgets.

Thousands of people are on debt management plans (DMPs), which are used when a person owes money to several different companies and is unable to repay them under the original agreement.

Creditors are provided with a monthly payment that is smaller yet consistent. In exchange for reducing the chances of a default, lenders usually freeze interest and other fees.

Inflation is currently rising at a rapid pace, the quickest since 1992. This implies that some people who previously adhered to their DMP repayment schedules are suddenly finding it much more difficult to do so. Rising residential gas and energy costs, as well as rapidly rising prices, are anticipated to exacerbate the problem.

In March, nearly twice as many of the charity’s customers reported that rising living costs were a major factor in their debt, compared to six months earlier.

After a lack of financial management and unemployment or redundancy, it was the third most probable cause mentioned.

Sara Williams, who maintains the Debt Camel blog, which has studied this topic, believes that early indicators of trouble should be handled.

She warned that with the possibility of more price increases, anyone who is struggling today should consider how they would get by for the next three months or longer.

People reaching for a credit card as the sole means to pay for gas in the car was one of the tell-tale signals, she said.

divya

Leave a Reply

Your email address will not be published.