thedebtblog.co.uk

Understandably the Citizens Advice Bureaux (CAB) has been overwhelmed with people seeking debt help as the credit crunch begins to take hold of family finances in the UK.

Last week Alastair Darling was critised over the fact the government made out that £9 million in additional funding was given to the CAB over the next 3 years, when infact the budget was being cut by £3 million a year!

>>Click here to read the story in The Sun - £9 million con on advice bureaux

The first debt management companies started in the UK in early 1994 because of the alarming debt situation developing at the time. The economy at the time was still recovering from the effects of increased interest rates from the 1980’s and early 1990’s. In the 80’s mortgage and loan repayments rose, because of interest rate rises and so many people found themselves with much less disposable income.

Also, as interest rates were rising very rapidly, at a much higher rate than inflation, it was almost impossible to save any cash in order to buy products. Credit was the main way to make a purchase at the time.

This created the ‘buy now pay later’ environment we know today. This environment also created a vicious circle where people became trapped by debt.

Poor financial understanding and poor financial management resulted in many people being unable to maintain payments to their creditors.

Hence the need for debt management services in the UK since the mid 1990’s.