Citizens Advice Bureaux are reporting a sharp rise in the number of serious debt problems being brought to them. Figures released today by national umbrella charity Citizens Advice show that their bureau network in England and Wales advised on 1.4 million debt problems in the year 2005/06, an increase of 11% on the previous year.

One in five of all CAB clients needed advice on debt problems. The Citizens Advice Bureau network is already the largest single provider of free, independent and expert debt advice in the UK.

Consumer credit debt - including problems with credit cards, store cards and charge cards, unsecured personal loans, bank and building society overdrafts. catalogue and mail order debts - remains the biggest problem area, accounting for 824,000 enquiries. The number of consumer credit debt enquiries has more than doubled in the last eight years.

But housing debt, including problems with mortgage, secured loans and rent arrears, was one of the fastest growing problem areas, up by 20% on the previous year. Of the 127,000 housing debt problems brought to Citizens Advice Bureaux nearly 10,000 concerned threatened repossession and 2,000 concerned actual repossession or eviction. These figures bear out the findings of an NOP survey for Citizens Advice published in September showing that some 770,000 people had missed at least one mortgage payment in the previous twelve months.

Council tax debt problems handled by bureaux went up by almost half (46%) to 89,000, and utilities debt problems (gas, electricity, telephone and water) were up by 19% to 90,000. Recent big hikes in fuel prices make it likely that these problems will continue to grow.

Bankruptcy accounted for 65,000 of the debt problems handled by Citizens Advice Bureaux.

Citizens Advice Chief Executive David Harker said:
"Our debt enquiry figures are deeply worrying. They suggest that a growing number of people are getting deeper into unmanageable debt it will be difficult to recover from. Many of our clients already face a lifetime of debt and research we published in May found it will take them an average of 77 years to pay off the money they owe at a rate they can afford.

"We are particularly concerned by the sharp rise in enquiries from people getting behind with mortgage payments and having trouble paying council tax, gas and electricity bills, at a time when court action that can lead to repossession is on the increase, and fuel prices are rising steeply. This is likely to lead to more people than ever experiencing the sort of serious debt problems our advisers are already seeing day in day out.”

Citizens Advice received £33 million of DTI-administered funding from the Financial Inclusion Fund in April 2006 to increase the availability of face-to-face debt advice to financially excluded clients in deprived communities. This involves recruiting and training 370 new debt advisers within an 18-month period. At the start of October 2006 there were 233 new debt advisers already recruited.

David Harker said, Having more debt advisers will enable local bureaux to see people quickly and act at an earlier stage to stop their debts from increasing. However, our evidence shows a clear need for more responsible lending. There are still too many cases where clients should not have been given the levels of credit they have received. Lenders need to do more to ensure every person’s circumstances and their ability to sustain payments are fully taken on board when lending. We also want to see all creditors taking steps to help people manage their debt problems.”