Croydon has been named as the area of Britain where people are most worried about their mounting debts.
Postcode analysis by debt management firm PayPlan of the locations of the 40,000 people seeking urgent help with their debts over the past year identified the south London suburb as the debt-worry hotspot.
But the firm said high numbers of people also contacted it from the likes of Coventry and Northampton. The average debt of those who contacted the company from York stands at £145,464, the highest figure in the country. The average debt level of people is £83,465.
Jason Eaves, PayPlan director, said: “Right now we are being told that the economy is ‘out of intensive care’ but there are still a few years ahead where people will continue to struggle financially. Currently there are 2.5 million unemployed and many others who have had to take jobs that pay less than their previous roles.
“Many families have seen their budgets squeezed. Some parts of the country are in recovery while other parts are still in decline; but even in more affluent areas if wage increases have not matched the rising cost of living then debt is still a problem.”
Redhill in Surrey, for instance, is part of London’s commuter belt, yet it is where the fifth highest number of people who have sought debt help in the past 12 months reside. Grantham in Lincolnshire – the birthplace of Margaret Thatcher – is seventh on the list.
High earners are not immune to ending up in a spiral of debt, warned Mr Eaves. “Many people are struggling to make ends meet, so if mortgage rates rise and gas and electricity prices increase it will push many more people into problem debt.”
A few years ago people who turned to debt management were on low incomes and living in rented accommodation. Now they include everyone from homeowners with debt levels of around £200,000 to young families and retired people.
Croydon public sector worker Ed Swain is a typical case. Despite holding down a full-time demanding job, he fell into debt six years ago after being tempted by credit offers from banks and credit cards. “It seemed to be the normal thing in society to use bank loans and credit cards on holidays, cars, weekend breaks and other luxury items, so that was what I did,” he said.
“In your mind when you’re spending it seems easy to think ‘I can pay that back monthly’. However there came a point where I could no longer afford the monthly payments along with all the other household bills.”
With his wages frozen in the past few years, the constant rises in the cost of living took their toll on his finances. “My situation worsened as I was no longer able to maintain minimum payments and I fell into arrears,” he said. “I borrowed more money to pay off the debts and this ‘robbing Peter to pay Paul’ situation continued for four years, during which I had sleepless nights and my relationship with my family and loved ones broke down.”
Eventually he turned to a counselling service offered through his employer and that helped him to sort out his finances by setting up a debt management plan where his creditors agreed to accept less than he owed as long as he keeps to a regular affordable payment schedule.
Payplan has now published the national debt map on payplan.com to highlight the fact that people who are struggling with debts are not alone.
Top ten: Debt hotspots
1. Croydon (below)
This list is based on numbers of people contacting the company PayPlan for assistance.