Debt crisis: The number of middle class professionals plunging into the red is increasingly rapidly. (Posed by model)
Middle Britain has been hit by a devastating debt crisis, experts said yesterday.
Even apparently well-off people with good jobs have plunged into the red.
Debt advice centres in middle-class areas have seen increases of up to 500 per cent in the numbers of people pleading for help.
There are even fears of suicides prompted by despair and shame.
Financial advisers gave examples of how deeply the crisis is biting.
• A TV producer on £70,000 a year, with £26,500 credit card and other debts and £25,500 in loans secured against property;
• An IT consultant on £28,500 who has £28,500 debt and a county court judgment against him;
• A retired bank manager with an income of £40,000 and £110,000 of debt from 20 credit cards and loans.
Many household budgets have been pushed to breaking point and beyond by the disappearance of cheap mortgage deals, due to the global credit crunch, coupled with higher bills for food, utilities, petrol and other essentials.
Those tempted by bank offers of cheap credit over the last decade now find they cannot meet the repayments on their debts.
The epidemic is spreading so fast that some debt advice centres are reported to be turning people away because there are simply too few experts to help them. Centres in Haywards Heath, West Sussex, and Congleton, Cheshire – an area dubbed Footballers' Wives territory – have seen increases of 500 per cent in the inquiries they are receiving.
The Congleton centre has 135 clients who share a staggering £5.1million in debt.
The figures on those seeking help come from Transact, which co-ordinates the activities of some 1,200 debt advice centres across the country.
Spokesman James Elliott said they were seeing a new type of client.
"In the past it was almost uniquely people on benefits, people in social housing, who went to debt advice agencies," he said.
"Since the credit crunch started they are seeing a big increase in professional people and homeowners – people who have been pushed over the edge and now can't cope with their outgoings.
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Breaking point: Debt advice centres in middle-class areas have seen increases of up to 500 per cent in the numbers of people pleading for help. (Posed by models)
"These services are being overwhelmed by a whole new breed of debtor – middle-class people. But it means there is now much less debt advice to go round."
At one time, people who ran up massive credit card bills and overdrafts looked to clear the slate by borrowing more against their homes through remortgaging.
But the banks have shut off that escape route with tough new rules on lending to those already carrying big debts.
Community Money Advice, a charity which helps to establish and support money-advice services, reports an 85 per cent increase nationwide in the number of people seeking financial help in the 12 months to December.
There was an increase of 234 per cent in demand for its services on Tunbridge Wells, Kent, and rises of 55 per cent in Cambridge and 48 per cent in Horsham, West Sussex.
Chief executive Heather Keates said: "We are seeing a new type of client.
"Teachers, police and banking and service sector workers, many of them homeowners, are struggling with mortgages, secured loans and credit card debts.
"They were already financially stretched but they have now been pushed over the edge by dearer credit and the big increases in food and utility costs."
Miss Keates added: "Some of the figures are staggering. We have one or two clients with debts of millions of pounds".
Such large debts usually arise from property and stock market investments that have gone wrong, however, rather than domestic problems.
The charity has also seen an alarming increase in the number of people whose homes are being repossessed.
Emma Russell, senior adviser at the Mid-Sussex Debt Advice Centre, said the average debt of their clients – not counting their mortgages – was now running at around £20,000.
"We've seen probably almost a 100per cent increase in clients. This time last year we were really quite quiet," she told the BBC.
"I've had at least two clients sit in front of me and tell me they would have killed themselves if they hadn't found out we were here."
Advisers say a large part of the blame for the crisis must be taken by people who have lived the high life with new homes, cars, designer clothes and holidays – all bought on credit.
But experts insist that banks and other financial institutions must take some responsibility for encouraging people to go into debt by handing out credit cards without proper financial checks.
They also believe the government should do more to educate people about personal finance, so they can avoid the problems now hitting so many families.