Crunch hits middle classes as debt problem 'gets ugly'

The credit crunch and rising cost of living are pushing more middle class families into debt purgatory.

Financial inclusion charity Transact is seeing demand for debt help in traditional middle class areas soar – with member Community Money Advice reporting an overall increase in calls for help of 85 per cent, but demand in places such as Tunbridge Wells up 234 per cent.

Cambridge and Horsham saw increases in calls for debt help of 55 per cent and 48 per cent respectively, as the credit crunch bites middle England.

Some centres have seen the average debts people are coming forward with rise form £20,000 to £110,000.

Heather Keats, director of Community Money Advice, explained the charity is seeing new types of clients – when traditionally they assisted households on low incomes and relying on benefits.

“We are seeing a new type of client. Teachers, police and banking and service sector workers, many of them homeowners, are struggling with mortgages, secured loans, and credit card debts," she said.

"They were already financially stretched but have been pushed over the edge by dearer credit and big increases in food and utility costs."

Chris Tapp, from debt charity Credit Action, explained homeowners now represented the biggest growth in demand for its National Debtline.

“The whole face of the debt problem is getting uglier,” he said.

“We are dealing with many more mortgage problems and repossession hearings which are more complicated and take far longer to deal with than other credit issues."


Daniel Barnes