Articles | Credit crunch hits middle classes

Credit crunch hits middle classes

Published: Sunday, 18 May 2008, 7:26AM

A debt advice charity says it cannot cope with demands for help in some of the most affluent parts of the country.

Transact said the increase was most dramatic among the middle classes, with many professionals and homeowners unable to cope with their debts.

It said some advice centres were turning people away. In affluent areas such as Haywards Heath in Sussex and Congleton in Cheshire, there had been a 100 per cent rise in inquiries over the past year.

Transact is a national charity that represents more than 1,000 organisations and individuals involved with people suffering financial hardship, such as the Citizens Advice Bureau, credit unions and housing associations.

Transact co-ordinator Jamie Elliott said: "In the past it was almost uniquely people on benefits, people in social housing who went to debt advice agencies.

"These services now with the credit crunch are being overwhelmed by a whole new breed of debtor: middle class people. But what that means is there is much less debt advice to go round."

Transact says many of the people seen in debt advice centres have taken advantage of easy access to credit or extended mortgages to get extra cash.

But the credit crunch means lenders have become less willing to be flexible over repayments. Added to millions of fixed-rate mortgages coming to an end, higher fuel costs, food bills and council tax, it says many people on reasonable salaries are struggling.

Transact expects the problem to get worse and wants more funding for debt advice and financial education.

Senior debt adviser Emma Russell said: "We've seen probably almost a 100 per cent increase in clients. This time last year we were really quite quiet.

"I've had at least two clients sit in front of me and tell me they would have killed themselves if they hadn't found out we were here."