By Felicity Anderson

A leading debt charity has warned that ‘financial shocks,’ such as redundancy and divorce are amongst the biggest drivers of personal debt problems in the UK.

During a review of its debt helpline service, StepChange revealed that 619,946 new clients contacted it for debt advice last year, which is 3.5% more than in 2016, and 22% more than four years earlier, according to the Guardian.

The charity has also found an increase in young people using its services, with about one in seven new clients now under 25, often experiencing financial problems due to budgeting issues.

Redundancy and divorce among the biggest causes of personal debt

All age groups, however, are badly affected by lack of money coming from an unexpected loss of income, which leads them precariously into the red, reports the BBC.

Unemployment was the most common reason cited for debt problems at 18.7%, followed by injury or illness (16.4%) and lack of budgeting (14.3%).

A high proportion of single parents and tenants have sought help from the charity, with it claiming that 21% of those using its services for the first time were single parents with children, despite this group making up only 6% of UK households.

Continued debt problems

Highlighting that large numbers of adults continue to be affected by debt problems, the charity warns that an improving economic situation across the country doesn’t necessarily mean an improvement in personal finances.

“The anxious face of human debt”

“It can be too easy to look at statistics and fail to see the anxious human face of problem debt,” said Phil Andrew, StepChange’s chief executive.

“Our clients show that the debt problem is far from solved. With the prospect of higher interest rates ahead, it would be a mistake to take too much reassurance from the gradual improvement in the wider economy.”

Household debts

Source BBC

The charity found that tenants were more likely than most to seek guidance for help with debt problems, with four in five of those contacting the charity tenants, although only a third of UK households rent their home.

Providing information on how much debt arrears each StepChange client has, it found average arrears of just under £3,500 for mortgage payments, over £1,500 for county court judgments and £1,000 for council tax.

Two in five clients had arrears on the debts that should be considered as a priority, according to the charity.

The average couple with children owed £16,834 last year, while single parents had unsecured debts of £10,033.