Covid and debt
Covid and debt: This week, National Debt Awareness Week coincides with the one-year anniversary since the first UK national lockdown was imposed. The pandemic, and series of lockdowns over the course of the past year, have caused great damage to many people’s personal finances.
Research by the debt charity Stepchange found that the number of people who are in severe debt has risen to 1.2 million – nearly doubling since March 2020– with a further 3 million people at risk of falling into arrears after taking on extra short-term loans.
Tackling the Coronavirus Personal Debt Crisis
The Stepchange report, Tackling the Coronavirus Personal Debt Crisis, found that 14.9 million people – 29% of the adult population – suffered a hit to their finances in when the first lockdown began. Of course, there have been a number of government interventions since then designed to ease the financial burden on households affected. However, the time is approaching when inevitably these are unwound. This raises the very real prospect that many, many more people may find themselves falling into debt.
A problem shared
We know that talking about money worries can help. But whether it is due to embarrassment, hoping the problem will go away, or not knowing who to turn to for help, not enough people open up about money troubles. one of the last few taboo subjects.
According to a recent FCA, Report Financial Lives 2020 survey: the impact of the coronavirus only 3.3% or 1.7m of the adult population used a debt management service between March-October 2020, a similar amount to the previous year. The main barriers cited were embarrassment, not wanting to deal with the problem, and a lack of awareness that free services exist.
Yet for those who do use a debt advice service, satisfaction is high with over 60% feeling their debt is more manageable having spoken to an adviser. There are many really helpful and free debt advice services available, including Citizens Advice and the Money Service.
At Elva, we partner with Stepchange to offer debt management advice to employees who are struggling to deal with it. This is an integral part of our service and one that we encourage employees to use if they feel they are not coping.