£32,000 debts put St Albans residents in top 10 of credit crunch areas

PUBLISHED: 11:44 23 August 2008 | UPDATED: 13:31 06 May 2010

DEBT-ridden residents of St Albans have placed the district in the top 10 postcode areas nationwide suffering most from the credit crunch. It has come in sixth place in a survey of 9,500 people compiled by advice company ClearDebt which shows people in th

DEBT-ridden residents of St Albans have placed the district in the top 10 postcode areas nationwide suffering most from the credit crunch.

It has come in sixth place in a survey of 9,500 people compiled by advice company ClearDebt which shows people in the district owe an average of £32,650 in unsecured debt.

St Albans is some way behind the City of London which came top with residents owing more than £41,000 each - but is the highest district in Herts and has come above both Stevenage and Watford both of which also feature in the top 10.

The survey shows that while the poorest get into debt most often, the middle classes rack up much more borrowings when they get into trouble.

St Albans District Council's portfolio holder for resources Councillor Chris Oxley said the reason St Albans people were having to resort to credit cards and overdrafts was because they were mortgaged up to the hilt due to high property prices.

He said: "St Albans is a fabulous place to live and house prices reflect this so when people need ready money for their families they are unable to borrow more against mortgages."

The situation in the St Albans district comes as no surprise to money adviser Lesley Gordon of St Albans Citizens Advice Bureau (CAB) who has been seeing an ever-growing number of people swamped in a sea of debt.

She said: "We see people who owe more than £100,000 but it is more usual to see people owing around £30,000. But for people on benefits to owe £6,000 or £7,000 is just as crippling because they have no means of paying it back."

She cited one typical scenario where a family with three children had a mortgage plus £40,000 unsecured debt. The husband had to retire early due to ill-health. Although the wife still worked full-time, the drop in income meant they were struggling.

CAB helped them draw up a financial statement and negotiated token payments to their unsecured creditors. Eventually the property was sold and the family moved to cheaper rented accommodation. They now have sufficient spare money each month to enter into an Individual Voluntary Arrangement with their remaining creditors.

Mrs Gordon said the rising tide of repossessions had not hit St Albans yet but suspected that it was just a matter of time before it did.

In the main the CAB were seeing people who had been made redundant after working for firms for less than a year which meant they weren't entitled to severance pay.

But she pointed out that the credit crunch had imposed more financial strain on marriages which in turn led to marriage breakdowns and debts accruing upon relationship breakdown.

Ill health was another factor which caused people to incur debt.

She added: "We're now seeing more people in their 50s or 60s who are in debt due to the live now, pay later culture when credit was freely available."

CAB run a debt line on Wednesdays between 9am and midday on 01727 833855 or appointments to see money advisers can be made on 01727 855269.

Portfolio holder for resources Councillor Chris Oxley said the reason St Albans people are having to resort to credit cards and overdrafts is because they are mortgaged up to the hilt due to high property prices.

He said: "St Albans is a fabulous place to live and house prices reflect this so when people need ready money for their families they are unable to borrow more against mortgages.

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