The effects of the recession are spreading far and wide and are even affecting the more affluent, Consumer Credit Counselling Services (CCCS) has said.

According to the debt charity, the recession is beginning to affect a “wider cross-section of society,” and whilst, on average, those in debt are better off and owe less money, they are finding it more difficult to keep on top of their debts.

With the exception of the over-60s, the CCCS’ review of debt in the UK during the past three years shows that the average amount of debt has fallen and the average person in debt is better off than they were three years ago.

“This is likely to be because the combination of rising unemployment and a falling housing market is creating a fundamental shift in the nature of the UK’s debt problem,” explains CCCS chairman Malcolm Hurlston.

“In cases of pure overborrowing where the debtor remains in work, there continues to be an income stream to service the mortgage and, at least in part, the unsecured debts,” he continued.

“However when unemployment triggers a debt problem, the fall in income can leave the borrower struggling to service both mortgage and unsecured debts, while the fall in house prices, and growth in negative equity, takes away the option of selling to clear the mortgage.”

And this shift in the indebted demographic is having an affect on the way the charity approaches each case, Mr Hurlston said, because the people who go to the CCCS to seek help have more complex financial lives than they used to.

Homeowners have around 83 per cent more debt than renters, the CCCS statistics show, which consequently makes the charity’s task “more difficult and time consuming.”

The CCCS is finding that people increasingly need more than one debt counseling session before a solution to their problems can be found, which is particularly common amongst homeowners and the self-employed, reflecting an ongoing trend which Mr Hurlston says the charity expects to “intensify in the coming months as the recession deepens.”

Despite the increased level of affluence amongst the CCCS client base, fewer people are able to repay their debts, the research shows, with only 35 being in a position to commit to a debt management plan in 2008, compared to 42 per cent in 2007, and 46 per cent in 2006.

And the charity is increasingly finding that those who do take up Debt Management Plans are experiencing more difficulty maintaining their payments.

“External forces over which the credit industry has no control including recession, unemployment, increases in the costs of everyday living and a falling housing market are compounding the problem of debt”, Mr Hurlston concluded. “These trends seem likely to continue for the foreseeable future: the perfect storm may have arrived but we have yet to reach its epicentre”.

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