Avoid New Year Debt Problems

05 January 2012

A Northumberland debt advice expert is warning those left financially vulnerable by the festive season to use extreme caution when dealing with companies offering commercial debt management services or payday loans. 

Liz Chadwick, Chief Executive of DAWN Advice, which offers free debt advice, warned that many could see their financial situation become even worse if debt problems are not managed correctly or if there is a delay in seeking help. 

The warning follows an industry estimate that 3.5million Britons may turn to payday loans over the next six months. A large proportion of which could see their money problems spiral even further out of control as they are drawn into a cycle of relying on short-term borrowing.

Meanwhile a recent BBC investigation found that more than £600,000 of supposedly-protected clients' money, held by a Somerset debt management company, went missing after the firm ceased trading, leaving people already struggling financially much more vulnerable and much deeper in debt.

Liz Chadwick said: "January is always a difficult month for people as the true cost of Christmas really starts to hit home.

"Credit and store card bills will begin to arrive and reminders for any payments which may have been forgotten in December will quickly flood in. People can also be struck by previous Christmas purchases, which they had long since put to back of their minds, if they'd taken out finance contracts such as 'pay nothing for 12 months'.

"Furthermore, employers sometimes bring forward the December payday to help employees cover the cost of the festive season - often seen as a token of generosity in December - but by the time the end of January arrives most will be starting to really feel the strain of making their pay stretch further than usual. 

"With all these financial pressures hanging over people's heads as they start the New Year turning to a payday loan or commercial debt management firm may seem like the most appealing solution.

"However, I would urge anyone considering this to stop and really think about what they may be getting into and to seek independent and impartial advice before signing on the dotted line to ensure that they have found the right debt solution to suit their situation."

Anyone concerned about their financial situation should contact the Northumberland Single Telephone Advice Line for free, confidential and independent advice on 0844 4111 309.

DAWN Advice is a social enterprise which offers advice on issues relating to debt, housing, employment, welfare benefits and family law - it is part of the national Citizens Advice service.