Getting help, says the charity, can make a huge difference in coming to a workable agreement with your lender or fuel company to manage your arrears, but added that it's vital that lenders show forbearance, treat people in difficulty fairly and do everything they should to help people stay in their home or manage arrears.
The figures reveal that Citizens Advice Bureaux in England and Wales saw 35% more mortgage and secured loan arrears problems over the last 12 months, compared with the previous 12 months, with 77,324 new enquiries since October 2007. The most recent figures for July to September 2008 (Q2 2008/9) show a 51% increase in new mortgage and secured loan enquiries and a 10% increase in fuel debts compared to the same period last year (Q2 2007/8).¹
However, the charity welcomed a reduction in the number of credit, store and charge card debts, and unsecured personal loan debts being seen by bureaux, down 4% year on year, although combined this still represents the largest type of debt the Citizens Advice Service sees at 35% of all the debt problems handled by bureaux. Mortgage and secured loan arrears account for 5% and fuel debt 4% of the total debt problems bureaux see.
A breakdown of clients with mortgage and secured debt arrears found that over half (51%) were aged 35-49. Half (49%) were households with dependent children and 1 in 5 (18% of total) were single parents with dependent children. 13% were disabled and 1 in ten (10%) had a long term health problem.
A recent Citizens Advice snapshot survey of clients with mortgage and secured loan arrears in June and July this year found that the average arrears people were in when the lender started possession action was 4 months. The most common reasons cited for people falling into arrears were loss of job or failure of business (20%), ill health (17%) and relationship breakdown (16%).
Citizens Advice Chief Executive, David Harker said: "While we are pleased to see the number of consumer credit problems going down, the increase in the number of enquiries about basic essentials is worrying and these figures show how the current economic situation is hitting vulnerable and low income households the hardest.
"To prevent this situation worsening, it is vital that mortgage lenders and fuel companies do everything in their power to help people in arrears to come to a workable solution over repayment arrangements, rather than piling on extra charges. All creditors should treat borrowers in arrears fairly and sympathetically, negotiate with borrowers in trouble and only use court action for mortgage arrears as a last resort.
"Anyone who is worried about debt should seek advice straight away. Get help from a CAB, or other free independent advice agency, who can help you work out payment options, check you are receiving all the benefits you are entitled to and help you claim any money that could off-set your costs. Up to £9.9 billion means tested benefits went unclaimed last year³ and a free, confidential benefits check could ensure that you aren't missing out on money that is rightfully yours.
"If you are falling behind with payments on a mortgage or secured loan you should speak to your lender straight away. Lenders should negotiate with borrowers, but if you are having problems, make sure you seek free, confidential, independent advice without delay. Receiving court papers doesn't mean that you are automatically going to lose your home. Getting advice, even at a late stage, can help the majority of people come to a workable agreement with their mortgage lender and can make all the difference between saving or losing their home."
