BBC
Karen, from Sheffield, said she was “in a total disaster” with her debts before seeking help from a city charity.
A woman who owed thousands of pounds on credit cards, catalogs and utility bills has praised staff at a financial advice service for helping her clear her personal debts for free.
Karen, 60, from Sheffield, said she was living “like a hermit” after having to move house and racking up significant debt after a relationship ended.
However, while visiting the city's S6 food bank, she was referred to Sheffield Christians Against Poverty (CAP), whose staff helped her apply for a debt relief order, which can now be done for free.
Karen said freeing herself from all the money she owed was “like a weight lifted” and she had since learned to budget better.
“The burden of debt”
A £90 fee for applying for a debt relief order was scrapped in April.
As a result, the number of applications in September 2024 almost doubled compared to the previous September, from 2,958 to a record high of 4,032.
Jayne Franklin, Sheffield CAP center manager, said the change had made a huge difference.
“This has given us hope that we can get people out of debt more quickly, so they don’t have to be left with the burden of debt hanging over them.”
Karen admitted that before she sought advice about her debts, she was “a complete mess” and wouldn't even answer her door.
“I didn't have anyone around, or my grandchildren for tea, or anything like that, because I didn't know what to feed them,” she said.
After getting help from Sheffield CAP and learning she could apply for a debt relief order at no cost, she said she now takes much more care of her finances.
“I never learned how to budget, but since I became debt free, I took a budgeting class,” she said.
Charities like the one in Sheffield can help people apply for debt relief orders for free.
The removal of the £90 fee for applying for a debt relief order came at a time when a growing number of people continue to struggle with the cost of everyday bills.
New research carried out on behalf of the Financial Inclusion Commission (FIC) by the University of Birmingham suggests that one in five adults have increased their borrowing to cover higher living costs, while one in six families has no savings.
The FIC has called for what it describes as a national inclusion strategy to help people struggling with debt and to help them access basics like a current account.
Meanwhile, debt advice service Money Wellness has warned that it is becoming easier to fall into the red.
In August 2023, service staff looked after 408 people with “buy now, pay later” debts, but by August 2024 this number had increased to 1,258.
Sebrina McCullogh, director of external affairs at Money Wellness, said more people were “forced into a position where they use credit as buy now, pay later to simply hold out until the end of the month”.
“They're using it for smaller transactions, instead of using it to spread the costs of larger transactions, which is really buy now, pay later because a product is meant to be used. “
Morgan, in Liverpool, said he was now advising his friends to avoid buy now, pay later schemes.
Morgan, 25, from Liverpool, said he had warned all his friends to avoid buy now, pay later.
He said that after falling behind on repayments to Klarna – Britain's biggest buy now, pay later lender – he took out a credit card loan to pay it off.
Morgan said he has spent the last three years climbing out of this spiral of increasing debt.
“It just made my life worse. I just wasn’t myself,” he said.
“I just turned into a closed shell, I was brash, stressed, depressed.”
Morgan said he felt like all of his friends had some sort of buy-now-pay-later loan, but added that he was determined to never take out another one.
He said he had “learned his lesson now”, explaining that he considered himself lucky to have managed to rent his current home for himself and his family despite his credit score.
“I can just focus on getting my life back on track now,” he said.
In a statement, Klarna said it carried out an eligibility check for each new purchase, adding that average customer debts were still much lower than credit cards.
The government recently announced plans to regulate the buy now, pay later sector.
The Treasury said it would introduce legislation to Parliament in early 2025, so the rules could come into force the following year.
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