Britain is facing a “personal debt tsunami” in the coming weeks and months due to the fallout from the coronavirus crisis.
That’s the view of the debt help charity StepChange, which is calling on the government to step in and provide support that’s needed by people who’ve been badly impacted financially by the COVID-19 situation.
The charity says that personal debts worth around £6 billion have already been taken on by individual consumers for reasons that are directly attributable to the pandemic.
As many as 4.6 million households across the UK could be affected by the crisis in ways that push them into or further into the red, according to StepChange.
From its perspective as a provider of debt advice, StepChange is preparing for a “deluge” of demand for guidance in the coming months once “the reality of people’s situations begins to hit home”.
More than four million people are believed to have borrowed money to make ends meet since the onset of the virus crisis, with roughly 1.7 million relying on credit cards for that purpose and 1.6 million using overdrafts to cover their essential costs.
Meanwhile, around 1.2 million people are thought to have fallen behind with their utility bills and more than half a million are estimated to have found themselves unable to pay their rent.
Paying council tax bills has also become a real problem for a lot of people, with 820,000 UK consumers thought to have been made unable to cover those costs due to the pandemic situation.
According to StepChange’s figures, 45 per cent of people who were already in problem debt before the crisis began have been negatively impacted by it, compared to 25 per cent of people who were not previously in financial difficulty.
“We were already dealing with a debt crisis, but Covid has so far added another four million people and counting to the number who are gong to need help finding their way back to financial health,” said Phil Andrew, StepChange’s chief executive.
“With £6 billion of additional household debt directly attributable to the effects of the pandemic, this is a problem that isn’t going to solve itself.”
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Our Scottish based team can help advise you on your debt problems.