Citizens Advice Barnet: Can you avoid the debt trap?

The cost of living crisis means many Barnet residents need help to break the cycle of debt writes Violet Mermelstein

A woman looking at a computer while receiving advice from a Citizens Advice adviser
Citizens Advice Barnet has seen over 1000 people with over 3000 debt-related problems in the last year – (Credit – Citzens Advice Barnet)

We are all guilty of assuming that the problems people face exist in a vacuum. Behind on your energy bills? That’s a debt problem. Worried about mould in the flat? That’s a housing problem. Need to apply for Universal Credit? That’s a benefit problem.

If the cost of living crisis has done anything, it has violently disabused us of this notion.

New research from Citizens Advice lays bare the impact that rising costs have had, not just on the financially vulnerable, but on anyone unfortunate enough to have needed a little extra help over the last few years.

  • Nearly a third of people on disability benefits (PIP) also need foodbank vouchers to survive. 
  • Over half those in debt with their rent also have Council Tax arrears. 
  • Most alarmingly, a fifth of the people we have seen with homelessness issues are already receiving housing benefits.

The numbers reveal the sobering reality that in the current economic climate, any unexpected setback can push a person into debt, and this debt has become almost impossible to escape from.

Let us consider the following situation (based on the experiences of people who sought help from Citizens Advice Barnet:

You are a parent of two children. You are separated from your partner. You work full-time and are just about keeping up with bills and rent as prices rise.

Then something happens. An accident at work? A cancer diagnosis? One of your children is sick? Your flat has mould? Perhaps you have to move?

Any of these problems could happen to anyone at any time. It means you now cannot work or suddenly your household expenditure has jumped. With no other access to funds, your only choice is to claim benefits and keep paying what you can.

You are now in debt. There is a shortfall between what you earn and what you have to pay out each month. The latest data shows that if you’re on benefits, this shortfall can be as high as £148 per month.

Half the people seen by Citizens Advice for debt issues this year have been in a negative budget. The likelihood of being in a negative budget is higher for single parents, ethnic minorities, those with a disability or those on benefits. If you receive any kind of sanction on your benefits there is a 91% chance you will be in a negative budget.

Returning to our hypothetical situation – what happens next? Prices continue to rise. The winter is approaching meaning higher energy costs, especially in properties with poor insulation. The stress of debt-related issues can lead to severe mental health concerns which in turn can limit your ability to work and manage finances.

As your debts continue to pile up, each month you are less and less able to pay them off, as the number grows and other issues begin to kick in automatically.

You are now trapped in the cycle of debt.

So what do we do?

Breaking this cycle can be nearly impossible, especially without outside support. Citizens Advice Barnet has seen over 1000 people with over 3000 debt-related problems in the last year and the numbers are growing.

For those caught in the cycle, it is essential to seek help as soon as possible. Specialised debt advisers can help you with payment plans, write-offs and, where necessary, discuss measures for Debt Relief Orders and Bankruptcy.

Citizens Advice Barnet is there for those who need this support. As one person seeking debt advice said: “Every time I came to you, there was always a positive walking away and a little bit of hope.”

Violet Mermelstein is Communications and Marketing Coordinator for Citizens Advice Barnet, a local charity which helps people in Barnet with expert advice and support. This is part two of a three part series exploring the effects of the cost of living crisis through the charity’s work.

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