A long-term personal debt crisis is an inevitable consequence of the Covid-19 pandemic unless urgent action is taken to support people in financial trouble.
That’s according to the debt help charity StepChange, whose research shows that more than £10 billion in additional household debt has been taken on this year because of the virus crisis.
The charity has estimated that there are around 1.2 million people in the UK who have been impacted financially by coronavirus and who are now dealing with “severe problem debt”.
That figure represents almost a doubling of people in severe problem debt since March and StepChange is concerned that a further three million people might soon find themselves in that same category.
“Despite a bold initial reaction to the pandemic, the government and financial services sector’s toolkit of responses has not evolved, and the result is a spiralling number of people being plunged into debt due to Covid-19,” said Phil Andrew, StepChange’s chief executive.
Mr Andrew welcomed steps taken recently by government to re-establish the job retention scheme and furlough but insisted that only a long-term strategic vision will be enough to prevent a household debt crisis heading into 2021 and beyond.
“We need to see the government provide targeted funding that can enable households to exit safely from coronavirus debt,” he said.
“Concentrating support in this way can reduce the hardship and damaging impact of long-term debt on health, mental health and the economy, as well as countering the impact of coronavirus on inequality.”
Among the findings of StepChange’s recent research was that people aged between 25 and 34 have been most at risk of falling behind on essential bills because of the pandemic.
Young adults with children, especially single parents, have been hit particularly hard by the virus situation and by the squeeze on incomes that has seen many thousands of people falling further into unsustainable debt.
If you live in Scotland and you are finding it tough to cope with your personal debt situation then Scotland Debt Solutions can help. Contact us directly to arrange a FREE and confidential consultation.
The number of Scots who have missed energy bill payments because they couldn’t afford to make them has increased sharply since 2020, according to a new set of figures.
Millions of low-income households across the UK are being dragged down by debts they accumulated during the pandemic.
Our Scottish based team can help advise you on your debt problems.