The Prime Minister, David Cameron, urged Brits to pay off their debt to help the UK economy recover. As part of the Conservative conference in Manchester, Mr Cameron took the opportunity to address the UK’s personal debt problem, which he states is part of the problem with the economy.

The Prime Minister said, “The only way out of a debt crisis is to deal with your debts. That means households, all of us, paying off our credit card and store card bills.”

In principle, we support the belief that people should repay their debt, where possible. However, Mr Cameron refused to praise UK citizens who have manged to repay their debt. In 2005, credit card debt levels reached £67bn, whereas in May 2011 the total had fallen to under £60bn. The number of people requesting credit cards has also dropped over the past 5 years to 59million from 68.8million.

People who have no available money, perhaps because they have lost their job, had their working hours reduced or don’t have enough money each month to pay their bills as they fall due will struggle to meet Mr Cameron’s plan.  The thousands of people we speak to are predominantly can’t pays, not won’t pays.”

The Can’t Pays

It’s important to stress that there is a difference between the ‘can’t pays’ and the ‘won’t pays’ for debt. People who refuse to pay their debt because they don’t want to should pay their debt back before it escalates and they receive a default on their credit file.

The Can’t Pays will be struggling to make their ends meet. Running their home, paying to get to work and simply meeting the minimum payments back to their debt is a struggle. Other than winning the lottery, they are stuck in an endless cycle which seems never ending. There are a number of solutions which can help people in the “Can’t Pay” category.

Debt Management Plan or Debt Arrangement Scheme could potentially help freeze interest and charges for people in debt, enabling them to repay their debt more efficiently. Another option is an IVA or Trust Deed. These solutions enable people to repay and affordable amount towards their debt over a definitive period of time. There are positives and negatives to these debt solutions which can be read on the solution page under “How can we help“.