Fresh Start Services Reach £2m of Managed Debt Milestone as Santander Research on Payday Loans and Credit Card Usage Shows Tough Times for UK Families

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Sheffield-based debt management company Fresh Start Services have settled £2m of debt for their clients as Santander research shows that many families are now forced to use credit cards and expensive loans to make ends meet.

individual voluntary arrangements

Fresh Start Services - The bankruptcy and personal insolvency specialists

Clients have told us that after taking out their first payday loan they have received unsolicited contact from other lenders offering credit and are now paying extremely high interest on a number of loans.

According to research released by Santander last month British consumers across all demographics increasingly relying on credit cards and even payday loans for meeting basic living costs. These findings are backed up by the experience of debt management companies dealing with families whose budgets are stretched to breaking point in the current economic climate.

As job prospects and wages diminish and prices go up the research shows that an increasing number of people are using their credit cards to fund everyday living expenses.

According to Dan Staniland of Fresh Start Services, who provide advice on individual voluntary arrangements and have dealt with over £2 million worth of debt for their clients in the last 18 months, this use of credit cards for everyday living costs is just the ‘thin end of the wedge’, Staniland notes; “If you have access to cheap credit and understand how to work the credit card system, credits cards can be a highly effective way of ensuring sufficient funds are available to meet essential household costs.”

The real problem lies not in the use of credit cards, but the remaining options for those who do not have good credit scores and are therefore refused access to the cheap credit that is available to others. For these people there are few options and so many are turning to payday loans to make ends meet and can eventually end up applying for debt relief orders. Staniland has read all the stats on Payday loans and is uniquely placed to see the tangible effects that this situation is having on consumers up and down the country, “We are seeing increasing numbers of people come to us with debt problems, either in a personal sense or a business context, who have got themselves in difficulties with Payday loans.”

Payday loans are an increasingly popular way of accessing quick cash for those who have been refused credit from more traditional and indeed cheaper sources such as credit cards and overdrafts. These loans are designed to be paid back within one or two weeks of taking the money and are conceived as a one-off service, however the way in which they are used and who is actually using them has changed quite dramatically in the last year or so.

Payday loans are given to in excess of 1.2m people in the UK each year which amounts to over £1.2 billion and as with credit card borrowing much of this acquired credit is going on everyday living expenses. Staniland is concerned with this statistic, “If an individual is going to a payday loan company to make up a shortfall in household income the danger is that this is an ongoing situation and we are seeing evidence that payday loan companies are attempting to exploit this circumstance.

“A significant number of our clients come to us for debt management plans and have told us that after taking out their first payday loan they have received unsolicited contact from other lenders offering credit and ended up in the situation whereby they are now paying extremely high interest to not one but maybe three or four payday loan lenders.
“Once an individual is in this situation, due to lack of income and the high interest rates it is almost impossible for them to get out of the circle of debt and crippling interest payments.

About Us

Fresh Start Services are a team of experts in the field of bankruptcy and personal insolvency. Our specialist bankruptcy advisors have a wealth of experience in offering detailed bankruptcy advice and assisting clients through the bankruptcy process.

Fresh Start Services
Holly Grove
South Yorkshire
S12 2DA
Tel: 0845 600 5066

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