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StepChange report: Coronavirus and personal debt

Posted by Natalie Pearson 19/06/20

StepChange debt charity aim to help people with debt problems take back control of their finances and their lives. Their latest briefing draws on national polling to understand how household finances have been affected by the coronavirus outbreak:

  • Since the start of the crisis in March, some 14 million people have experienced a negative effect on their income, with many building up big debts. 
  • Among those most affected, 4.6 million people have accumulated £6 billion of arrears and debt directly attributable to the crisis.
  • They estimate that each affected household has accumulated an additional £1,076 of arrears and £997 of debt. These figures reflect the situation as of late May and are likely to increase.

Other key findings include:

  • A majority of households who are struggling with coronavirus-related debt were not in financial difficulty before lockdown (70% of those affected).
  • 590,000 renters are in rent arrears to their landlord as a direct result of the pandemic.
  • 820,000 households have fallen behind on their council tax bills since the start of lockdown.
  • A further 580,000 people expect to fall behind on essential bills by the end of June. 

The unprecedented measures the Government has taken in recent months have provided a lifeline to millions of households.  

However, as lockdown eases and with the prospect of emergency protections soon being lifted, their policy briefing identifies four main areas for the next phase of the crisis that StepChange believe are in particular need of Government attention:

  1. Strong protections against housing insecurity and unaffordable repayment demands. This includes amendments to housing legislation to ensure the Government’s proposed new protocol to support affordable repayment plans is not circumvented.
  2. A £5 billion central fund to enable grants for households who are in arrears or have taken on crisis borrowing to secure the future for those most at risk of hardship.
  3. A safer route out of temporary financial difficulty, including where needed co-ordinated support that allows affordable rescheduling of repayments in a way that does not adversely affect people’s credit files.
  4. Permanent reforms to Universal Credit, including an end to the five-week wait to ensure the social security system is a genuine source of financial resilience and to help struggling households recover.

Download the full report here

 

Need help supporting a client in debt?

Our Consultancy Advice Line provide specialist advice on housing, housing debt and welfare benefit issues to help you support your clients. You can chat with an adviser Monday-Friday 8am-6pm by clicking the 'chat with us here' button across our website, or by calling 0300 330 0517.

Our Specialist Debt Advice Service (SDAS) provides free, expert guidance to advice workers to support them with their complex debt cases. You can submit a query online to the team here, or call the helpline on 03300 580 404 Monday-Friday 9am-5pm.

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