Why do people get trapped in debt and how can Housing Rights help?

Personal debt in the UK is growing quickly. The pace of that growth has increased since 2016 and is driven by consumer borrowing.  Consumer borrowing is growing at a rate of more than 10% per year.  The current high level and fast growth of consumer debt suggests that people are taking on unaffordable debts. 

Citizen’s Advice has recently carried out research to investigate problem debt in the UK.  A person is considered to be in problem debt if they are unable to afford their debt repayments.  The report has identified that 2.9 million UK households were struggling with problem debt in 2016.

The report examines the characteristics of those households who are struggling with problem debt, how they try to cope when they are in problem debt and what needs to change to prevent consumer lending from pushing people into this situation. 

Who gets into problem debt?

On average, 1 in 10 adults in the UK struggles with debt, but some groups of people are more likely to experience this, including:

• 1 in 3 lone parents
• 1 in 5 jobseekers
• 1 in 9 couples with children

The report found that the most common ways people try to cope with problem debt is to use a credit card to pay for household essentials (37%) or not pay off their credit card (35%). 

What needs to change?

Citizen’s Advice recommends:

• Credit cards should not trap people in debt. Lenders shouldn’t be allowed to increase a credit limit without a customer’s permission and should offer forbearance to customers stuck in problem debt.
• Lenders should scrap unarranged overdraft fees. High fees push people further into debt.
• Money advice should be provided at key moments in people’s lives. More people would get help if it was offered to them.
• People should have a clear route out of debt. Debt management plans should be legally enforceable.

How can Housing Rights help?

Housing Rights delivers a range of training that assists front line workers do help others become more financially capable. We have delivered Financial Capability training to Lenders, NIHE, Housing Associations, including both staff and tenants, and Prison Officers. These organisations  have identified that they have a role to play, and gains to be made, in promoting financial capability to their clients.

Our Financial Capability training looks at what financial capability means, what are the causes of debt in Northern Ireland. We highlight the issue of “can’t pay versus won’t pay” and look at potential vulnerabilities people may have and how this impacts on their financial capability. The course also looks at what are priority and non priority debts, how to prepare a financial statements and how to devise a sustainable repayment plan.

By the end of this course you will be able to empower and help your clients to manage their own budget and keep their home.
Recent feedback from the NIHE shows the value to staff attending the training;

“If the feedback is anything to go by I would say that staff fully enjoyed the training and we are confident that our customers will benefit from it.   It has been a delight working with you and the team from Housing Rights over the weeks, the expertise in delivering the course has made it a very worthwhile experience for NIHE staff.” NIHE

If you are interested in discussing your training needs, please contact our training team on [email protected].
If you are struggling to pay for your home, contact our helpline on 028 90 245640.