Unemployment is a key factor in the creation of the type of debt problems that can eventually result in the need for a debt management plan. This effect is also feeding through to families. A survey from Netmums suggests as many as 70% of families are financially “on the edge”.
Even families where both parents are working may currently be experiencing a tough time financially. The Netmums survey mentions that around two thirds of families have a lower income than last year and are short of money every week. In itself this suggests a growing need for debt solutions like a debt management plan in the coming years as people seek the means to bring their expenditure in line with their income.
Also mentioned in the survey is that 20% of the mums are sometimes missing meals so their children can eat. Debt management plan advisers often speak to people that have made severe cutbacks such as this in a desperate attempt to keep up with debt repayments and other financial commitments.
Debt management plan numbers are also likely to be driven upwards if the survey results about current credit usage are reflected in the wider community. Around a quarter of those surveyed had become reliant on credit cards to fund everyday expenses. This is indicative of a negative debt spiral where so much income is being consumed by debt repayments that insufficient disposable income remains to cover basic needs. A debt management plan is one of the ways to address and resolve this type of debt spiral.
One in twenty of the respondents reported that they were making frequent use of payday loans. Debt management plan firms have become highly critical of payday lenders as a result of the number of debt management plan clients that have got into trouble with these excessively expensive credit options.
The situation for women, and especially for those with children, appears likely to worsen in the coming months and years. It is widely anticipated that around 700,000 workers in the public-sector will lose their jobs over the coming five years. As many as four in five of these public-sector workers are female. Growing unemployment amongst women will inevitably cause debt problems leading to further demand for the services of debt management plan charities and companies.
It’s extremely worrying that women and families stand to be disproportionately affected by the wider economic problems around the UK and by unemployment in particular. Many will inevitably turn to credit in order to be able to keep up with their essential basic needs until they can return to work. Those who already have credit commitments may find that insolvency options or a debt management plan might be the only way to cope even once they are back at work.