Carrington Dean calls for taskforce to help UK households deal with COVID-19 debt

The private, public and third sectors must urgently form a taskforce to help the millions of people facing serious debt issues caused by COVID-19, according to insolvency firm Carrington Dean.

The call comes as the UK braces itself for the fallout of furlough and new restrictions while the pressures on public and third sector resources continue to be stretched to the limits by the pandemic and onset of winter.

Paul Mason, chief executive officer of Carrington Dean and Creditfix’s parent firm, Finbora Group, said: “The uncertainty that COVID-19 has spawned in socio-economic terms presents a real, tangible threat to how people will adapt financially to the yet to be fully realised fallout of the pandemic. This crucially includes their health, welfare and wellbeing.

“There is also a heightened concern about how front-line public and third sector services will manage, with the virus having already taken a heavy toll on resources. This could be stretched to the ultimate limits as they deal with fluctuating levels of new cases and consequently have a knock-on effect on other support services.

“As a result, it is fundamental that there is more cohesion between the private, public and private sector and a taskforce is pivotal to putting joined-up contingency plans in place to ensure people get support as and when they need it. From debt advice to networks of third-party support, the private sector is well positioned to act a buttress for the public sector.”

A report recently published by Carrington Dean in Scotland and its sister UK company, Creditfix - COVID-19 Debt Analysis: Insight and Trends – shows a sharp shift in trends towards debts after it conducted an in-depth analysis of more than 22,500 Creditfix clients across the UK.

The data, which examined how people were tackling debt and personal insolvency during April and September compared with the same period last year, showed a sharp rise in the number of people on higher incomes seeking debt arrangements which would protect assets such as their homes and cars.
There was also a stark 30% increase in clients entering a debt solution with a combined income and assets of £55,500 or more.

The firms also noted an increase of 20% in the debt owed by self-employed people. In contrast, debt owed by those in full-time employment has dropped by 10.4% and for those in part-time employment by 19.8%.

The level of debt owed by self-employed people is likely to have increased due to a difference in the level of government financial support available as the furlough scheme for PAYE workers.

The report also includes the findings of an independent YouGov survey which showed that more people (32%) were worried about the effect of COVID on their income than losing a loved one (30%) while more than 20% were concerned about losing their job and not being able to find work.

Mr Mason continued: “The coming months are likely to be more telling with the end of the furlough scheme and unpredictable restriction measures, combined with winter and temptations to overcompensate at Christmas, among key factors. There are serious concerns about how long the financial uncertainty can be sustained and the repercussions this may have on people and families across the nation.

“People from across all walks of life are affected and in order to help navigate them through these uncharted waters, it is critical that as much information as possible is provided to let them know about the wide range of support and options available. There are also many misconceptions about being in debt, but it need not be as complicated or as overwhelming as some may think.”

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