Thousands of claimants have unsecured debts

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The Independent Online

Thousands of people claiming Jobseeker's Allowance have run up massive debts they have no hope of repaying, a charity said today.

The Consumer Credit Counselling Service (CCCS) said one in eight people who contacted it for help during the first half of the year, a total of nearly 14,500 people, were claiming the benefit.

It said these people owed an average of £15,412 in unsecured debt each, with money owed to around five different creditors.

But it warned that these people had little hope of repaying the debt.

It said even if they spent the entire amount they received from Jobseeker's Allowance on debt repayments each week, it would still take them more than four-and-a-half years to become debt free, and even then this would only be the case if interest on the debt was frozen.

The group said the proportion of people who were in debt who were claiming Jobseeker's Allowance was nearly three times higher than across the population as a whole.

It said this was unsurprising as unemployment was one of the key reasons people were unable to keep up with their debts.

Nearly one in four people who contacted CCCS for help during the six months to the end of June for help with their debts blamed their problems on the fact that they had lost their job.

Malcolm Hurlston, chairman of the CCCS, said: "There is a causal link between unemployment and debt.

"Unemployment can devastate the finances of any family and our experience shows that once somebody with few financial options is forced to take out a loan to cover living costs they are often then trapped in debt for years to come.

"Thousands of people claiming Jobseeker's Allowance are ensnared by unsecured debt and their needs demand specific study.

"Government must be mindful of how welfare cuts will affect those living off benefits and move to ensure they are not damning huge numbers of people to a lifetime of debt."

A Department for Work and Pensions spokeswoman said: "Debt is one of the pathways to entrenched inter-generational poverty and no-one should get trapped into a cycle of debt and dependency.

"Our welfare reforms, coupled with the Work Programme, will give each individual the tailored support they need to get back into work and regain control of their lives."