Charity warns self-employed about dangers of debt

A credit charity has spoken out to warn the recently turned self-employed to be vigilant over their finances or risk incurring further debt as a result.

The Consumer Credit Counseling Service (CCCS) has warned those who have turned self-employed during the recession of the dangers of supporting their businesses with personal borrowing, as recent statistics show 1.2 million more people became self-employed during the economic downturn.

The mix of high unemployment, redundancies and lack of job opportunities has meant increasing numbers of people looking at other avenues to make a living, with many choosing to do so as self employed.

The survey includes anecdotal evidence suggesting many began working for themselves due to redundancy and job shortages, and that these same people are more likely to suffer debt problems, and are “struggling to make ends meet”.

Geoff Waugh, manager of CCCS’s counseling centre for the self employed, said: “CCCS regularly sees self employed people with debt problems who mix their business and personal finances.

“Many will often take out loans and credit cards to support their businesses during tough times, which can make their situation worse. Others will use the same bank account for both business transactions and day to day spending.

“Keeping your finances separate is essential, as it gives a greater degree of protection.”

Source: debtmanagementtoday.co.uk