We are now in the midst of recession and the levels of personal debt dwarf anything debt advisers have ever dreamed about in their worst nightmares.
Personal debt topped £1.5 trillion at the end of 2008, with interest payments alone being £81.8 billion a year.
Working as a debt adviser for the last 12 years has meant I have seen the misery, despair and frustration experienced by thousands of people who borrowed money which later, mainly through no fault of their own, they were unable to repay.
This may have been because they were sacked, made redundant, became too ill to work, got divorced, became a parent, or lost a loved one, or one of the many other reasons why people find paying creditors difficult.
Now we are seeing growing numbers of desperate people who are bearing the brunt of the economic crisis.
The job of the debt adviser is to give people hope and relief from the stress of being bullied and harassed into borrowing and repaying money.
We try, among other things, to prevent them losing their home.
Increasing numbers of working people – as well as those in receipt of benefits – struggle to maintain their debt repayments. Millions have fallen into arrears.
The requests to their lenders for help and assistance go unheeded and they are accused of simply being feckless and irresponsible in their spending habits.
When negotiating with creditors there is always an undercurrent, and sometimes an overt suggestion, that debtors are “won’t payers” rather than “can’t payers”. The claim is that by not paying back the money owed the debtors have in some way stolen the money, as if they had gone into a bank demanding the money at gun point.
It is not only unsecured credit that people are having problems with.
Debt advisers are seeing increasing numbers of people struggling to meet their basic expenditure needs, such as mortgage, rent, council tax and fuel costs.
“Right to Buy” leaseholders, who were preyed upon by the sub-prime lenders, are now seeking advice in some numbers to prevent repossession of homes that were previously rented out by social landlords.
With the slump in house prices these homeowners have become the next generation caught in the negative equity trap and face imminent homelessness with lenders only too willing to try to repossess their homes.
Council and housing association tenants are not faring any better.
For example, rents and service charges in the London borough of Lambeth are due to increase by almost 17 percent from April.
This will not only make it more difficult for people to maintain payments, but will create panic for those living on the bare minimum of state welfare benefits.
Rent repossessions are also rising fast. Housing associations are meant to be “socially responsible landlords”, but it is clear they are nothing more than private businesses covering themselves with the figleaf of “not for profit” tacked on to protect their immodesty.
Many of these housing associations have no shame in using mandatory grounds to evict their tenants – leaving the courts with no discretion to consider the tenants’ circumstances or offer the chance to sort things out. The courts are obliged to give possession to the landlord.
According to the Financial Services Authority there is an average of one repossession every ten minutes and one bankruptcy every five minutes.
Cash-strapped councils are increasingly turning to measures such as repossessing homes for unpaid council tax.
Southwark council has recently taken a full page advert in the local newspaper to explain how the council can obtain a charging order and force a sale – meaning the debtor could be made homeless and their home sold to pay off their council tax debts.
The root of the current debt crisis lies within a system that dreams up thousands of ways to make people feel as if they are part of Britain’s consumerist society – but only if they borrow enough to make it a reality.
The bankers and the government stand guilty of irresponsible lending, and aiding and abetting such reckless behaviour. Now the economy has blown up in their faces, they expect us to pay for it.
The government should be forced to use the billions it is spending on bailing out banks to help pay the debts of the millions who are struggling to survive a crisis that is not of their making.
Julian Vaughan is a debt adviser in south east London