Christmas debt set to take its toll in 2013

by Maureen Closs

Although Christmas sales figures have been less than overwhelming for 2012, staff at Citizens Advice still expecting a surge of post-Christmas debt cases.  The rush generally starts in January and runs flat out till the spring time as the bills begin to land on the doormat.

The problem for most clients of Citizens Advice, is that because their incomes are so tight, they have little or no slack in their budgets to cope with the additional expenditure that comes with Christmas. They have to turn to alternative sources for some quick cash. 

Those who have access to credit rely on credit cards or bank loans to pay for gifts and food and drink costs, whilst those with poor credit are more likely to depend on doorstep lenders or payday loan firms who will charge higher interest. This reliance on these money lending firms is of a particular concern - the financial ombudsman receives 50 new complaints a month against payday loan companies, most of which relate to the affordability of loans which should not have been granted. 

Mary Kinninmonth, Director of Dundee Citizens Advice Bureau, pointed out that this year is expected to be particularly bad because of the impact of benefits and tax credit cuts, increases in fuel charges and the squeeze on family incomes:

  “We always see more debt/money advice enquiries at the end of January through February as the bills begin to come in and people find they don’t have the wherewithal to pay.”

Kinninmonth explained how what Citizens Advice can help: 

 “We can help clients maximise their incomes by ensuring they are receiving all they are entitled to and contacting their creditors to look at spreading reduced payments over a longer period.  We can also challenge loans which have not been lawfully granted.” 

The irony is that Dundee CAB is struggling financially and now have only one debt worker and the rising debts will not get any better in the near future.