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More seeking help with mortgage and fuel arrears says Citizens Advice

10-10-2008

New figures released today by national charity Citizens Advice reveal that more people are seeking advice on how to manage mortgage and secured loan arrears and fuel debts. Getting help, says the charity, can make a huge difference in coming to a workable agreement with your lender or fuel company to manage your arrears, but added that it’s vital that lenders show forbearance, treat people in difficulty fairly and do everything they should to help people stay in their home or manage arrears.

The figures reveal that Citizens Advice Bureaux in England and Wales saw 35% more mortgage and secured loan arrears problems over the last 12 months, compared with the previous 12 months, with 77,324 new enquiries since October 2007. The most recent figures for July to September 2008 (Q2 2008/9) show a 51% increase in new mortgage and secured loan enquiries and a 10% increase in fuel debts compared to the same period last year (Q2 2007/8).¹

However, the charity welcomed a reduction in the number of credit, store and charge card debts, and unsecured personal loan debts being seen by bureaux, down 4% year on year, although combined this still represents the largest type of debt the Citizens Advice Service sees at 35% of all the debt problems handled by bureaux. Mortgage and secured loan arrears account for 5% and fuel debt 4% of the total debt problems bureaux see.

A breakdown of clients with mortgage and secured debt arrears found that over half (51%) were aged 35-49. Half (49%) were households with dependent children and 1 in 5 (18% of total) were single parents with dependent children. 13% were disabled and 1 in ten (10%) had a long term health problem.

A recent Citizens Advice snapshot survey² of clients with mortgage and secured loan arrears in June and July this year found that the average arrears people were in when the lender started possession action was 4 months. The most common reasons cited for people falling into arrears were loss of job or failure of business (20%), ill health (17%) and relationship breakdown (16%).

Citizens Advice Chief Executive, David Harker said:

“While we are pleased to see the number of consumer credit problems going down, the increase in the number of enquiries about basic essentials is worrying and these figures show how the current economic situation is hitting vulnerable and low income households the hardest.

“To prevent this situation worsening, it is vital that mortgage lenders and fuel companies do everything in their power to help people in arrears to come to a workable solution over repayment arrangements, rather than piling on extra charges. All creditors should treat borrowers in arrears fairly and sympathetically, negotiate with borrowers in trouble and only use court action for mortgage arrears as a last resort.

“Anyone who is worried about debt should seek advice straight away. Get help from a CAB, or other free independent advice agency, who can help you work out payment options, check you are receiving all the benefits you are entitled to and help you claim any money that could off-set your costs. Up to £9.9 billion means tested benefits went unclaimed last year³ and a free, confidential benefits check could ensure that you aren’t missing out on money that is rightfully yours.

“If you are falling behind with payments on a mortgage or secured loan you should speak to your lender straight away. Lenders should negotiate with borrowers, but if you are having problems, make sure you seek free, confidential, independent advice without delay. Receiving court papers doesn’t mean that you are automatically going to lose your home. Getting advice, even at a late stage, can help the majority of people come to a workable agreement with their mortgage lender and can make all the difference between saving or losing their home.”

Tips for people struggling with their mortgage:

• www.citizensadvice.org.uk/pressoffice/press_20080815

Credit and debt fact sheets:

• www.adviceguide.org.uk/debt_fact_sheet_index

6-12 October is Advice Week. For Advice Week 2008 Citizens Advice is working with advice agencies Advice UK, Advice Services Alliance, Age Concern, Law Centres Federation and Youth Access as part of the Working Together for Advice project funded by the Big Lottery to to promote the value of advice to the public.

Key facts

• In 2007/8 the Citizens Advice service saw 1.9 million clients with 5.54 million issues, of which 1.7 million issues related to debt and 1.5 issues related to benefits (see below).
• There are 426 member bureaux, of which there are 653 bureau locations, 1,800 regular outreaches and 750 irregular or one-off outreaches
• 85% bureaux offer home visits, 35% offer hospital visits and 37% offer out-of hours service
• Across the service, advice is given in 74 different languages
• 26,000 people work for bureaux, of whom 15,800 are volunteers, 6,000 are paid staff and 4,200 trustees

Notes on mortgage and debt figures:

1. Number of issues seen by Citizens Advice Bureaux in England and Wales

2. Based on telephone interviews with advisers about a sample of 417 CAB clients who came to bureaux with new mortgage and secured loan arrears in late June and early July.

3. Source DWP: www.dwp.gov.uk/income_analysis/0607_NSPR

Notes to editors on Citizens Advice

1. The Citizens Advice service is a network of independent charities that helps people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more information in England and Wales; www.citizensadvice.org.uk
2. The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
3. Most Citizens Advice service staff are trained volunteers, working at over 3,300 locations across England and Wales.
4. Advice and information  www.adviceguide.org.uk
5. Volunteer hotline 08451 264264 (local rate)
6. Citizens Advice Guide to your rights, second edition: January 2008 - over 600 pages of practical, independent CAB advice. An invaluable resource for any bookshelf - available from all good bookshops; price £11.99; ISBN: 9780141034089

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