Monday, 24 March 2014

Hopkins v Hopkins... the debt debate

I watched the recent Channel 5 Debt Debate, shouting at the TV like so many others. Is the country full of irresponsible borrowers who are too ‘stupid’ to know what they’re doing and too ‘irresponsible’ to care? Katie Hopkins thinks so, but Kath Hopkins knows differently.

Debt is not just about reckless borrowing for PS4s and Christmas presents. It’s about life events that cause a drop in income; about struggling to pay rent, council tax, utility bills and food; about not being able to save because you have so little to live on and about lack of availability of advice services at an early enough stage to help prevent debt.

Here are the details of my last five clients... Are they the people portrayed on the debate?

Client 1 – Ill health meant this person could not work and had to claim benefits. He fell into mortgage arrears. His mortgage company said they would only accept interest only payments for six months, so now he has to pay £375 per month to cover the repayment part of his mortgage. He receives £303pm Employment Support Allowance. He hopes to be able to return to work but cannot afford to pay priorities at present from the £5.77 a week he has left.

Client 2 – Her husband suffered a stroke. He had been self-employed for many years, but is now unable to work. She has had to cease working in order to be his full time carer. They have mortgage and utility debt. They do also have non-priority debt, but have taken responsibility for it and have a payment plan via Step Change, but are still struggling to pay for essentials.

Client 3 - Worked solidly since leaving school until a mental health condition meant he was unable to continue working at age 47. He is managing to pay all of his priority bills but has catalogue debt and a very high oil bill as he is not on the mains gas supply. He tried to get advice, but had only heard of the Citizens Advice Bureau and, as his local office had closed, he thought there was nowhere else to  go.

Client 4 – Her husband was made redundant then, shortly after, found he had a critical illness. She needs to care for him full time so is unable to work. They have utility arrears only and are struggling to pay bills.

Client 5 – Separated from her husband, she is unable to work due to a disability. She applied for PIP in September, but is still waiting for a decision. Meanwhile she is surviving on £70 a week ESA. She only owes the council for dinner money as no-one told her she was eligible for free school meals.

Yes, Katie Hopkins, in an ideal world we would all work in well paid jobs. We would all save up for non-essential purchases. We would all insure against ill health and redundancy. However, I live in the real world and this just isn’t possible for most people who live here too. Wages are stretched too thin to be able to think about saving. Sickness and redundancy insurance are non-priorities and not available to the self employed.

Not all debt is due to reckless spending and irresponsible lending, it’s also caused by not having enough money to be able to manage day to day. Are people who work and borrow from the bank to buy a car so they can travel to work any better than the person who buys a sofa from Brighthouse? No, they are just the same. They are just luckier to have more options available to them.

Saving is even harder for those on benefits. How can you save when you have £70 per week to live on and are not able to find work or are not in a position to look for work due to ill health or caring responsibilities? How can you save when out of your £70 a week you have to pay £23 'bedroom tax', £10 gas, £10 electric, £10 water, £3.50 TV licence and £5 child support, leaving £8.50 for food, travel, phone and clothes?

What were your thoughts on the Debt Debate? Do you agree with Katie Hopkins or with Kath Hopkins?

Kath Hopkins
Money Advisor 


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