The Office of Fair Trading has estimated that the payday loan market was worth up to £2.2 billion in 2011/12, which corresponds to between 7.4 and 8.2 million new loans.
The Citizens Advice Bureau offers the following tips for dealing with debt problems.
Work out how much you owe
- First, make a list of all your creditors so you can see how much you owe.
- You will need to collect the following information for each debt: the name and address of the creditor, the account or reference number and a copy of the original loan agreement you signed
Prioritise your debts
- Some debts have more serious consequences if they are not paid for than others.
- Priority debts include mortgage or rent arrears, gas and electricity arrears, council tax, court fines and child maintenance payments.
- Non-priority debts include benefit overpayments, credit debts, water charges, student loans and money borrowed from friends or family.
Work out your budget
- List all the income for your household including net wages or salaries .
- If the amounts are different each month, average them over three or six months.
- Include any benefits you receive such as Child Benefit and tax credits, child maintenance payment benefits, contributions from other members of your family or lodgers.
- Contact your creditors and make arrangements to pay back what you owe.
- Sort out priority debts before coming to any arrangement with non-priority creditors.
- You can ask non-priority creditors if they can freeze the interest on your debts while you deal with them.
- Make a note of all telephone calls or meetings.
- Visit the National Debtline website or call them free on 0808 808 4000