LOSS OF INCOME REMAINS TOP REASON FOR DEBT PROBLEMS

Atlantic Financial Management research highlights debt troubles facing consumers

April 2013

The latest figures from leading debt solutions provider, Atlantic Financial Management, reveal that 36% of its clients cite loss or reduction in income as the reason for their debt problems, a 13% increase compared to the previous year. In addition, 14% still admit to spiralling debt as a main cause, as they use one card or loan to pay off another. As the Government’s welfare reforms take effect this month, Atlantic Financial Management continues to help UK consumers struggling with debt.

"Overall, the financial picture is unchanged with UK consumers struggling to make ends meet..."

Looking at the period from April 2012 to March 2013 and comparing it with the previous 12 months, Atlantic Financial Management reveals the top debt reasons among its clients. Loss of Income, Debt Spiral and Poor Financial Management remain the top three reasons, with Divorce slipping to fifth place, below Illness. Compared to the previous year, Increased Expenditure has shot up from last place to sixth, rising from 0.2% to 5%. Retirement has also increased from 1.6% to 4.2%.

Samantha Duffin, Director of Atlantic Financial Management, says, “Overall, the financial picture is unchanged with UK consumers struggling to make ends meet. It’s interesting to see that Increased Expenditure is a bigger issue for many people, as the rising cost of food and fuel takes its toll on householders. This could become an even bigger issue, as the government makes sweeping welfare changes, including the ‘bedroom tax’. In addition, the legal aid cuts could put pressure on families facing divorce or separation, pushing them further into debt.

"Over a third of our clients say their debt woes are down to loss of earnings – significantly more than the year before..."

“Over a third of our clients say their debt woes are down to loss of earnings – significantly more than the year before. In contrast fewer people cite spiralling debt or poor financial management, as reasons for their debt. This suggests that people may be managing their finances better, but events beyond their control, such as job loss, divorce and rising living costs, are adding to their money worries. Retirement is a bigger issue in 2012/13, rising from 1.6% to 4.2%, illustrating how a sudden loss of income and no savings could push someone into unmanageable debt.

“Life changes can leave people in a vulnerable position, but Atlantic Financial Management offers expert one-to-one help, support and advice to those in financial difficulty. Through face-to-face meetings and a thorough review of an individual’s or household’s financial commitments, our licensed advisers are able to provide professional debt and financial advice. Armed with the right information, consumers can make informed choices, helping them regain control of their finances, in a realistic timeframe based upon their personal circumstances.”

TOP REASONS FOR DEBT AMONG ATLANTIC FINANCIAL MANAGEMENT CASES