Loss of income remains top debt reason for Britons

In the latest set of figures from debt solutions provider, Atlantic Financial Management, it was revealed that loss of income is still the main reason for Britons seeking debt help.

Results compiled from 4,600 new cases that Atlantic Financial Management saw between March 1 2010 and September 30 2010 showed that 34% of people in need of debt advice listed ‘loss of income’ as the catalyst for their financial problems.

Loss of income encompasses hours being reduced and pay being cut, as well as redundancy.

The figures indicate that the recessionary climate is still being felt by many, as employers increasingly look to save costs and sacrifice workers’ hours and wages.

The survey of debt management clients uncovered that the next biggest debt reason was debt spiral, with 23% of respondents stating that juggling multiple credit cards and a number of different creditors had become too much to handle.

For 12% of indebted Britons, simply ‘poor financial management’ had led to their debt situation.

Further debt reasons included divorce/separation (9%), mental or physical illness (6%), unemployment (5%), the birth of a child (2%), retirement (1%), bereavement (1%) and increased expenditure (1%).

Previous survey results of 4,000 debt management clients from August 2009 to February 2010 also stated loss of income and debt spiral as the main reasons for falling into debt.

Kevin Still, director of Atlantic Financial Management, called the proportion of people suffering from loss of income ‘concerning’, saying: “This is the second consecutive time in our analyses that loss of income is the primary reason for clients coming to us, which shows that financial stress and concerns over job security aren’t a good mix, especially if you have limited financial reserves.

“This is probably the case for over 19 million people in the UK.”

He added: “Mental and physical illness were also listed as debt reasons, indicating that there is a danger that working too hard may mean time off through sickness and then coming back too quickly, and so the cycle goes on. Many people are borrowing to make ends meet and so a debt spiral can arise that will explode if there is a major loss of income.”

Source: debtmanagementtoday.co.uk