What causes debt?

There are many reasons why people find themselves in debt and not managing money well is just one of them. Low income groups are especially vulnerable. Some 66% of households cite changes of circumstance as the main trigger events for debt.

• Change in work circumstances (30%)
  accident; illness; loss of overtime or bonus; a change of employment; redundancy. Read the debt diary of Sayara Beg
• Change in family circumstances (26%)
  e.g. buying a house; mortgage rate increase; pregnancy; bereavement; divorce or separation
• Poor money management/planning (38%)
  e.g. over spending or over commitment on credit; regularly leaving a balance outstanding on credit cards at the end of the month or making a minimum payment only; social or peer pressure; impulse buying or must haves; addictions such as drink, gambling or shopping (‘retail therapy’)
• Unforeseen expenses (6%)
  e.g. anything from the car failing the MOT to uninsured loss of possessions.

These trigger events are the beginning of a downward spiral which is hard to stop: missed payments, penalty charges, juggling payments and multiple credit cards, increasing creditor pressure and the threat of court proceedings. The impact on people's lives can be brutal.