Self-employed urged to act on debt

A debt charity has said it was unable to help around half of all self-employed people who contacted it because they did not have enough income.

The Consumer Credit Counselling Service said more than 6,500 people had contacted its Self Employed Centre for help so far this year.

But in half of cases the charity was unable to help them find a way out of their financial problems because they did not have enough money to go on to a repayment plan.

In some cases, it said people were not bringing in enough just to meet their essential living costs, let alone repay their debts, while in extreme cases people could not even afford the fees associated with going bankrupt.

The charity said a large proportion of those contacting it for help worked in service industries, where they were employed as hairdressers, gardeners or taxi drivers.

It said these were the types of services that consumers cut back on when they were tightening their belts, leaving this category of unemployed people particularly vulnerable to the economic downturn.

The group said only around 1,600 of the self-employed people who had contacted it had enough money left over after meeting their essential living costs to go on a debt management plan, under which they reach an agreement with their creditors to repay their debt at an affordable rate.

Others were advised to take out an individual voluntary arrangement or go bankrupt or take out a debt relief order – all different forms of insolvency – while in some cases people were able to afford their minimum monthly repayments once they had received help with budgeting.

But in half of the cases it looked at, people were told they needed to find a way of increasing their income, such as by working longer hours, getting a second job or taking in a lodger.

Geoff Waugh, head of the CCCS Self Employed Centre, said: "The economic difficulties of the past few years have meant that a lot of people are carrying out work that they would have previously paid other people to do. This has left many self-employed people without work and unable to maintain their debt commitments. The personal finances of the self-employed are often complicated, with little distinction between their personal and business finances."

Source: The Press Association