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Two out of five Ashfield residents in financial trouble

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More than a third of people in Ashfield are in personal financial difficulty, shocking new figures reveal.

The study reveals that two in five people in the district are struggling to make it to pay day.

The research carried out by insolvency trade body R3 paints a damning a picture of the struggle many people now face just to get to payday due to household bills like energy or rent, or repaying credit cards and payday loans.

Ashfield MP Gloria De Piero has vowed to tackle “cowboys” making money out of debt management advice and legal loan sharks profiting from the situation.

The MP said: “As well as action on our energy bills, I’m backing plans to get tough on debt management companies, to make sure people have access to good debt advice and alternative affordable finance.

Ms De Piero added: “Anyone here in Ashfield worried about their debts or worried about debt in our community should get in touch with my office.

Millions of people are now turning to payday lenders just to cope with the cost of living and debt repayments.

Many people have little or no savings and if interest rates rise or rents continue to go up it could force more families out on the street or becoming so called zombie debtors- paying just the interest not the capital on their debts.

In Parliament, the Ashfield MP vowed to support Labour’s amendments to the Consumer Rights Bill to address the fees that debt management companies charge as well as pushing for a levy on payday lenders to pay for debt advice provision.

Eller Ferris of the Mansfield branch of the Nottingham Credit Union, said: “We come across people who have entered into debt management and it is a very cynical process. People are signed up onto products not suitable for them.

She said Individual Voluntary Arrangements (IVAs) were being sold as a Government loophole to get people out of debt, adding: “For some people it is a legitimate way of paying for things if they have life problems, but it is akin to bankruptcy.

“It might look like an easy solution but when you apply for credit in the future you will have a big black mark to your name.

“There are other ways like the CAB Pay plan or call the credit union, where people can go and have other arrangements rather than going to a company that will charge you for this.”

Dave (34), from Sutton, is getting his life back on track after racking up huge debts that led him and his wife being declared bankrupt last August.

The dad of two young children said that going to seek advice for his financial problems at the Citizen’s Advice Bureau was the best decision he ever made.

He said: “We didn’t know what to do. If I could offer any advice to anybody it is to take your head out of the sand and go and see somebody.”

Dave and his wife both had some personal debt before they bought a property together and took on a mortgage of £89,000. They were offered a loan for 25 per cent of the value of their property, took on an extra £36,000 and used it to pay off their credit cards and other debts.

They used their credit cards to start two businesses in 2006, but when these both failed within six months, they realised they were in trouble.

With unpaid bills mounting up, they moved out of their home. Dave lost a well paid job and the couple turned to a debt management company.

They decided paying the company to handle their debts could not go on, so they went to a different debt management company for advice.

They recommended bankruptcy and Dave then went to see the CAB. The couple owed a whopping £66,000 to 10-plus debtors - including their mortgage, loan, credit cards, gas and electricity bills and council tax.

CAB helped Dave and his wife through bankruptcy and they are now in a much better financial position for it.

Debt cases represent a third of the work undertaken by Ashfield Citizens Advice Bureau .

Over the past four years they have dealt with £34 million pounds worth of debt.

Advocacy and representation to the Advice Quality Standard with casework in debt and welfare benefits is provided.

Casework advocacy extends to court representation in housing repossessions and bankruptcy in debt matters and tribunal representation for welfare benefits.

CAB have just taken on a Financial Capability Worker who will shortly be running sessions with Ashfield people on how better to manage their money as part of a strategy to break the cycle of debt.

 

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