Page last updated at 00:04 GMT, Tuesday, 18 March 2008

Rising numbers seek debt advice

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The housing market has stalled in recent months

Fears over mortgage arrears and household bills have led to a surge in the number of people seeking help from the Citizens Advice service.

A survey of more than 300 offices, compiled for the BBC, found a 35% rise in mortgage queries in January and February compared with 12 months ago.

Rising household bills also contributed to 215,000 new debt problems taken to the service in January and February.

But the figures also showed that credit card debt problems were down by 9%.

'Worrying trend'

Nearly a third of the 5.7 million new problems dealt with by staff at Citizens Advice bureaux in 2006-7 concerned debt, making it the biggest single issue they faced.

Most indebted
1. Richmond-upon-Thames
2. Putney
3. Kingston-upon-Thames
4. Windsor
5. Wandsworth

Least indebted
1. Dumfries
2. Chesterfield
3. Merthyr Tydfil
4. Skegness

Source: Experian

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In the first two months of 2008, mortgage queries leapt by 35% compared with January and February last year.

The survey follows warnings from the Council of Mortgage Lenders that predicted a rise in repossessions in 2008 owing to the credit squeeze, after a 21% rise last year.

"It is a worrying trend that our bureaux are reporting very sharp increase in the number of mortgage arrears problems they are dealing with," said Teresa Perchard, Citizens Advice director of policy.

Squeeze on households

She added that the survey also painted a worrying picture of households struggling to meet their basic living costs, such as utility, telephone and council tax bills.

One bureau offered advice to a single man with multiple debts who faced fuel bills amounting to more than 20% of his income.

Another saw a disabled woman whose only warmth was from storage heaters and who spending 30 of her 70 cash a week on electricity.

"The combination of big increases in household bills, especially fuel, and rising housing costs is putting additional pressure on people's finances when they are already stretched to the limit," said Ms Perchard.

Credit card restraint

Despite traditional Christmas excess, credit card debt problems brought to the CAB fell by 9% in the first two months of the year, although overdraft issues were up 7% on the same period a year ago.

Highest rises
1. Northern Ireland
2. Kensington
3. Chelsea
4. Wandsworth
5. Wolverhampton
6. Aberdeen
7. Rotherham
8. Hammersmith
9. Manchester Central
10. West Bromwich
Source: Experian
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The fall in credit card debt was mirrored in figures by credit reference agency Experian.

It claimed that lenders had been more choosy about who they offered credit to, even before the credit crunch started last summer.

This meant that an explosion in credit card use was prevented.

But Experian said that householders had also heeded warnings not to overstretch themselves by hitting the plastic.

"The flat, almost negligible, growth in credit card balances suggests that consumers themselves have also taken a more responsible approach to borrowing," their report said.

It said consumers were looking to lower cost or more affordable credit, as well as cutting down on borrowing altogether.

Highest rises
1. Penzance
2. Bromley
3. Skipton
4. Eastleigh
5. Bromsgrove
6. Abergavenny
7. Newbury
8. St Helens
9. Beverley
10. Newark On Trent
Source: Experian
Most computers will open PDF documents automatically, but you may need to download Adobe Acrobat Reader.

Total outstanding balances on UK borrowing, reported to Experian by lenders, rose by 9.24% over the last 12 months, slowing from a 14% rise over the previous year.

Facing up to debt

The Experian research suggests that people in Richmond-upon-Thames were the most indebted, although Northern Ireland showed the biggest change in total debt, up 23% in the last 12 months.

The CAB said people in debt should tell their creditors straight away if they were facing difficulties in paying and bureau staff could help put together payment plans, explain the options and ensure any entitled benefits were being claimed.

At the other end of the scale, the smallest increases in debt came in Aldershot, Dartford, Ilford, Bishops Stortford and Newport on the Isle of Wight, said Experian.

The least indebted area was Dumfries.

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