Unemployment and debt

Unemployment advice from Money Advice Direct

Unemployment is on increase and lot of people are getting into debt as a result in the UK. To this end Money Advice Direct has launched the 'Unemployment and Debt Team (UDT)' which will provide advice and guidance on how to deal with debt if the public is facing redundancy or long & short team unemployment.

Debt servicing for the unemployment is obviously difficult. The problem is that the unemployed still need to spend money servicing debt interest payments otherwise they will receive negative entries on their credit files.

The UK benefit and social security system actively provides support for the unemployment. There is no actual help from the government towards people paying interest in their unsecured debt though. Unemployment levels and debt levels are still very high, as much as three-quarters of all the unemployed are in debt and unemployment but only a fraction is seeking best advice.

Unemployment and debt is a rising issue

We want to warn the public and advice sector that any rise in unemployment could leave many Briton's, particularly homeowners, struggling to keep up with debt repayments. Homeowners that take home less than £18,000 are thought to be most at risk if the economy sours.

Debt Facts

• People on lower incomes - below £500 per month after tax - were, unsurprisingly, struggling the greatest under the debt burden.
• On average, people with low owed several times their monthly income.
• Debt levels are higher among house buyers than among renters.
• The average debt excluding mortgages, for buyers was £23,000 compared with £14,000 for tenants in rented properties.
• Banks are encouraging borrowers to take on more debt, leaving them exposed to any downturn in the economy stemming from current uncertainty.

Benefit entitlement, debt and unemployment

There are many entitlements and contacts for help, dealing with debt and unemployment. If you are having difficulties with debt we can provide confidential and non-judgemental advice and practical help.

If you are having problems paying your council tax you should contact your local district council as soon as possible. Don't leave it until the situation is desperate. They have advisers who will help you to apply for any benefits you may be entitled to, such as housing benefit.

For the best unemployment advice have a look also at the Jobcentre Plus website. This site offers advice and information on making a claim if unemployed and on finding a job and has many other useful links.

Other Benefits include:-

• Income Support
• Working Families' Tax Credit
• Jobseeker's Allowance
• Child Benefit
• Council Tax Benefit
• Housing Benefit
• Disability Living Allowance
• Incapacity Benefit
• Invalid Care Allowance
• State Pension
• SERPS (State Earnings Related Pension Scheme)
• Children's Tax Credit

Money Advice Direct understand that increasing household debts are unlikely to cause a problem for the economy if house prices fall, but would be a factor if unemployment rose. The dangers of a rise in unemployment are therefore related to debt in the UK.

When people fear the consequences of unemployment to their homes, debts and livelihoods, it is vital that they are aware there of their options. With job security being rare, managing debt becomes even more important. When debts become unmanageable due to unemployment, the longer it takes to seek help, the more difficult the problem becomes. For further information call 0800 074 6918 or visit www.insolvencyhelpline.co.uk.

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