Sep 10

Self employed at risk of debt denial

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If recent reports are to be believed, Britain is sitting on a new £173bn debt time bomb that could well explode when the much hyped interest rate rise inevitably happens.

It seems that the country has been lured into a big case of debt denial and, according to one of the UK’s largest free debt advice providers, it is a growing problem.

According to new research from PayPlan, £20,000 of debt has been identified as the ‘tipping point’ figure, where the majority of people go into denial about their finances. With an increasing number of self-employed professionals falling into this category, many are risking their own livelihoods by refusing to acknowledge the problem.

PayPlan surveyed people in debt up and down the country to identify at what point their financial situation becomes a question of denial.

The average debt of PayPlan customers over the past 12 months is just over the identified ‘tipping point’ at £21,670. The report also reveals that 1 in 6 people who owe more than this amount still think this is a low or insignificant debt.

Jane Clack, a money adviser at PayPlan, was once self-employed and in serious debt herself and knows first-hand just how much of a struggle it can be.

“We live in a society of debt denial. Rather than throwing overdue letters away we put them to one side, under the microwave to collect dust. These results show that the point where many people think ‘Oh well, I’m in this deep, what difference will another credit card make?’ is actually dangerously high.

“The problem can be compounded for self-employed people when you also take into account the pressure of running your own business or inconsistent incomes.”

Of the 9,000 respondents, 42 per cent only realised they had a debt problem when creditors began harassing them over the phone, while 73 per cent of respondents suffered with stress, anxiety, depression or insomnia as a result. Additionally, 58 per cent of those experiencing money worries hid their problems from their partner or family.

“The stress factor is huge, particularly for those who are self-employed,” continued Jane. “Anxiety and lack of sleep can severely impact on productivity. If you are unable to work because of this, then there’s no form of sick pay as a back up. Things can quickly spiral out of control.”

To help counteract the problem, PayPlan has created a Tipping Point Hub to help identify signs of debt denial and to assist people with taking control of their finances once more.


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