Counsellors braced for spiralling debt crisis
Community-based debt counsellors are bracing themselves for a major crisis in 2013 and beyond as benefit cuts take hold in Northern Ireland’s unemployment hotspots.
Londonderry, Limavady and Strabane regularly feature at the top of the list of Northern Ireland’s jobless towns.
Counsellors across the north west said debt levels are already spiralling to unprecedented levels, with increasing numbers of people turning to moneylenders who charge massive interest rates.
Debt and money advisors from the Bogside, Waterside and Strabane gathered yesterday to launch a new Debt Action NI service in the Caw/ Nelson Drive area of Derry.
It came after the Telegraph revealed the Citizens Advice Bureau in Derry already dealt with £25.1m of debt this year — a 100% rise on 2011 levels. Debt Action NI advisor Sean McCallion, who is based at Dove House in Derry, said he too had seen a “massive increase” in debt problems facing local people over the past 18 months.
He said: “The nature of the debt has changed a bit. Previously people would have been able to run up debts such as credit cards and take equity out of their house and pay off their credit card debts.
“But people can no longer get equity on their house because house prices have collapsed.
“There is definitely a lot of mortgage arrears and they are increasing due to the same factors that other debts are rising — unemployment and reductions in income. The Government has also cut mortgage interest relief.”
Mr McCallion said the lack of employment opportunities and increasing numbers of people joining the dole queues was also impacting.
“The building industry is decimated and a lot of people from that industry can’t find work anywhere else. People are finding it difficult to make ends meet,” he said.
“Reduction in welfare is going to impact and it is going to be really, really drastic.
“Once the cutbacks in universal credit come through in 2013 people are going to find it very difficult and the situation is going to get worse.
“Inflation is happening, prices are going up and despite the low interest rate by Bank of England at 0.5% credit card companies are about to put their rates up.
“People may well have to make choices about heating or eating.”
His colleague in Strabane, Michael Lyttle, said a similar picture was emerging in the Tyrone town.
“Our service is getting busier, and busier and busier. One day last week I had seven people phoning in for new appointments.”
Mr Lyttle agreed that the situation was likely to get worse over the coming years.
Further information on coping with debt is available on www.debtaction-ni.net