Debt advice - why is it important?
The importance of debt advice has been growing for many groups of society in recent months, with access to lending down and interest rates on savings accounts also falling.
While the base rate, as set by the Bank of England`s Monetary Policy Committee, is at a historic low, the same cannot be said of credit card rates.
An analysis of the market conducted by Moneyfacts shows that competitive deals are still being withdrawn and the rates on the deals that remain are rising month by month.
Over the past six months, rates have increased to the extent that average cardholders who make minimum repayments on a balance of £2,000 face an additional £408 in interest each year.
Products specifically intended to deal with debt - such as debt consolidation loans, Individual Voluntary Arrangements (IVAs) or their Scottish equivalent, Trust Deeds - could offer ways to resolve any increase in outgoings.
Many people may therefore look to tackle their financial difficulties by seeking debt help - but what are the best ways to come by debt advice?
Debt advice for the young
Young people in particular know what they want when looking for debt help, according to action group Youth Access.
"Recession-hit young people prefer to get advice about their problems from a face-to-face service targeted specifically at them," Youth Access asserts.
A study published by the group suggests that younger people are also offered debt help through other means - such as automated telephone or internet services - rather than in a face-to-face setting.
The group stresses the need for young people to be given personalised debt help, rather than generic tips, which could help them to enter into the best debt management plans for their circumstances.
But it is not only young people who are in need of assistance, as the Personal Finance Society (PFS) has also been conducting a trial to determine how many Britons are currently looking for debt advice.
Debt advice for older people
In meetings with over 1,130 people with financial difficulties, the PFS found some common themes which continue to cause confusion for consumers.
Paperwork is one of these, with 89 per cent of those interviewed revealing that they had sought debt advice simply to understand the details of products more clearly.
Fay Goddard, chief executive of the PFS, says: "The public needs help and guidance today more than ever. They need to be able to talk to a person they can trust."
The study, which was based at Citizens Advice Bureaux across the country, dealt with almost 2,300 debt management-related issues during its duration.
Citizens Advice adds that the majority of the applicants were over 50 years of age and, despite owning their own homes, had relatively little money coming in each month.
As a result, many were unable to afford independent financial advisers when seeking advice on the best debt management plans for their circumstances.
Being proactive about debt consolidation
Figures from financial services provider Halifax indicate that many people are finding alternative means of tackling financial trouble.
While the number of people declaring bankruptcy or entering into an IVA has increased over the past year, Halifax reports that the number who are borrowing as a means of debt consolidation has also increased.
In its Annual Loans Review published towards the end of May, Halifax listed debt consolidation loans as the primary use for its unsecured lending in 2008.
Some 54 per cent of unsecured loans approved by the financial services provider during the year were intended to be used to shift balances away from higher-interest forms of lending such as store cards.
This does not, however, mean that all households are succeeding in using debt consolidation loans to escape insolvency.
Insolvency in 2009 - bankruptcy, IVAs and Trust Deeds
In the first quarter of 2009, the number of people entering into IVAs in England and Wales rose by 3.6 per cent over the previous quarter - and 11.8 per cent over the previous year, according to Insolvency Service statistics.
Overall, 19 per cent more people were declared insolvent when bankruptcies are taken into account than was the case in the first quarter of 2008.
North of the border in Scotland, the number of protected Trust Deeds entered into also rose over the previous quarter, up seven per cent to 1,971 individual cases in the first three months of 2009.
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Tags: debt, debt advice, Personal Finance Society, Bank of England, base rate, credit card rates, Halifax, Citizens Advice Bureau, Citizens Advice Bureau debt advice