Rising cost of living puts people in financial red

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Rising cost of living puts people in financial red

He says the family is in emergency credit on the electricity meter every other day, and their grocery bill has gone up by 50%, and sometimes a meal is beans on toast. That is adding to the pressure of existing debts.

The soaring cost of living is changing the nature of problem debt. Whereas once ballooning credit card bills were the norm, now more and more people face long-term financial problems because they don't have enough money for basic necessities, such as heating, food and council tax bills.

With costs skyrocketing, we are seeing people who are saddled with debt sink further into hardship, says Dame Clare Moriarty, chief executive of Citizens Advice. More people are seeking debt support that they had never had to turn to us before - like homeowners who are living in one room to save on heating costs.

This alarming trend is creating a ticking time bomb. Every day our advisers hear from people with less than zero each month, unable to repay debts and slipping further into the red to afford the basics. Citizens Advice does debt assessments for people who are looking for help from the charity. Data from these cases shows that the amounts people owe are less than the past, but an increasing proportion is in the red after covering their basic outgoings, known as a negative budget.

The government has stepped in to help millions of people with universal credit, as well as other benefits, with a huge package of cost-of-living payments, as well as a cap on energy bills.

StepChange says a fifth of the new clients are still citing the cost of living as their main reason for debt, and seven in 10 of them are women.