2M HIT BY DEBT TRAP - FAMILIES OWE £5,300 EACH

MORE than two million families have fallen further into the red in the past six months.

Total debts in the UK now top £700billion. That works out at £5,300 for every household, according to the Office of Fair Trading.

The Money Advice Trust reveals that two million people - one in 20 of the population - were caught by surprise when they saw their borrowings increase in the last six months. And just under half had not budgeted for the increase.
Spending on the home and on children's education were the main reasons for the rise, research shows. The Trust's Alan Jarvis says: "It's vital these borrowers don't let the situation become a problem by burying their heads in the sand."

That is something gas and electricity salesman Mr Marley admits he did. The 35-year-old from Doncaster, S Yorks, was earning up to £1,000 a week when thousands of homes were changing their gas and electricity.
"The more you earn, the more you spend. You get a lifestyle. I got offered loans and credit cards and gold cards and I took them. When my business was good back in 97/98 it was very good. But when it came to paying them back it was not quite as easy. I couldn't get out of it no matter what I did."

His £1,000 a week dropped as his earnings were based on sales and if he didn't sell he didn't earn. Eventually he owed around £36,000 to about 14 different card and loan firms and would have needed to pay £1,000 a month to stay ahead. "There was a hell of a lot of stress and I had to take time off work and see a doctor. At the height of it all I was getting up to three nasty letters a day," says Paul.

Finally he was advised to contact **Money Advice Trust and **National Debtline. They told him his debts were about average, which came as a shock to Paul. He was advised to speak to his creditors and eventually arranged a manageable monthly payment of £210.

"I am on the road to recovery, though it will take me years to pay it all off. I can't borrow any more but even if I could I wouldn't want to," he says. If you think you're getting into debt trouble get advice and don't borrow more to get out of trouble until you've talked to someone.

If you've lost your job, check whether payments are covered by payment protection insurance. Work out a personal budget and get in touch with all your creditors to explain your difficulties. Tackle priority debts first. Mortgage, electricity, gas and water bills are usually top of the pile.

Work out a reasonable offer to creditors. Creditors usually prefer receiving something rather than nothing.

If you have trouble getting their agreement, keep trying. Always cooperate with courts if your problems go that far and always attend hearings - attending county court doesn't make you a criminal and you won't end up in jail. Always keep copies of all letters you receive from creditors or courts.

MONEY ADVICE

NATIONAL Debtline is on 080 8808 4000 or contact your local Citizens' Advice Bureau for free independent advice.

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