Surge in number of people falling behind with council tax and energy bills as households feel the strain, charity warns
StepChange says that over 30 per cent of new clients in the first half of the year were in debt to their council, while 13.4 per cent were behind on a gas or electricity bill
WORRYING new figures reveal a rising number of people are falling behind on their council tax and energy bills.
Debt charity StepChange says that over 30 per cent of new clients in the first half of the year were in debt to their council, while 13.4 per cent were behind on a gas or electricity bill.
Customers owed on average £999 in unpaid council tax and £1,260 on gas and electricity bills.
The findings come at a time when local authorities use of bailiffs is "far too common" with widespread "poor practice".
Energy suppliers meanwhile have been hiking prices over the last few months, which will hit people hardest during winter when they're using more energy.
The problem with energy is that while some customers may be able to cut bills by switching, StepChange says others feel nervous of the complexity of price tariffs and wary of being caught out and being put in an even worse financial position.
How to prioritise your debts
THE consequences of not paying off some debts before others can be more serious.
According to the Money Advice Service, the consequences of not paying off priority debts could include being visited by bailiffs, receieving a court summons, being made bankrupt or having your heating or lighting cut off.
Priority debts include:
- Court fines
- Council Tax
- TV Licence
- Child maintenance
- Gas and electricity bills
- Income tax, national insurance and VAT
- Mortgage, rent and any loans secured against your home
- Hire purchase agreements, if what you’re buying with them is essential
With non-emergency debts, target the debt with the highest interest rate shown on your monthly statement or loan agreement first.
The number of people using short term high cost credit debt – including payday loans - also rose in the first half of the year from 16.8 per cent of new clients to 18.3 per cent.
This rises again to 29 cent of people when you just look at those under the age of 25, and to 22 per cent of those aged 25 to 39.
The Sun's You're Not Alone campaign saw two mums tell the stories of how their sons were driven to suicide by crippling debts.
Back in May, the financial watchdog announced plans to crack down on "exceptionally high" rent-to-own products, as well as a raft of changes to overdrafts and stricter rules for doorstep lenders following our Stop the Credit Rip-Off campaign.
In total, 326,897 people contacted the charity for help with their debts in just the first six months of 2018.
How to cut the cost of your debt
HAVING large amounts of debt can be really worrying. Here are some tips from Citizens Advice on how you can take action.
- Check your bank balance on a regular basis - knowing your spending patterns is the first step to managing your money.
- Work out your budget - by writing down your income and taking away your essential bills such as food and transport. If you have money left over, plan in advance what else you’ll spend or save. If you don’t, look at ways to cut your costs.
- Pay off more than the minimum - If you’ve got credit card debts, aim to pay off more than the minimum amount each month to bring down your bill quicker.
- Pay your most expensive credit card sooner - If you have more than one credit card and can’t pay the balance off in full each month, prioritise the most expensive card (the one with the highest interest rate).
- Get free advice - If you’re struggling to pay your debts month after month it’s important you get advice as soon as possible, before they build up even further. Groups such as Citizens Advice and National Debtline offer free advice and can help you prioritise and negotiate with your creditors to offer you more affordable repayment plans.
StepChange says these "worrying trends" should sound alarm bells for local authorities, utility companies, regulators and the Government, and it's calling on them to urgently address the issues.
Phil Andrew, chief executive of StepChange Debt Charity, said: “We saw some particular worries in the first half of this year in the form of a resurgence in high cost short term credit among our clients, more people behind on fuel bills, and a stubbornly high incidence of council tax arrears.
"Council tax is especially concerning in light of mounting evidence that government debt collection practices are lagging far behind best practice.
Read more on debt
"Government must reflect on this evidence and ensure that government debt is included in the new statutory debt breathing space scheme.”
Citizens Advice reported earlier this year that households have ‘fallen behind on essential bills such as council tax to tune of £18.9billion.
How to get out of debt in eight simple steps.
We pay for your stories! Do you have a story for The Sun Online Money team? Email us at [email protected] or call 0207 78 24516. Don't forget to join the for the latest bargains and money-saving advice.