Self employed debtors looking for help on “Blue Monday” are far less likely to be able to repay their debts than other people, a leading debt charity said.
The Consumer Credit Counselling Service (CCCS) said it had only recommended a debt management plan to 17pc of the 10,000 self-employed people calling on its services last year, compared with an average of 27pc for all the people helped by the charity.
CCCS said more people who have been made redundant have set up their own businesses instead of seeking employment elsewhere and have come unstuck.
It said it had seen a significant number of people using their redundancy payments to qualify as driving instructors but then finding it hard to secure work after the course is completed.
Susan Roberts, team leader at the CCCS’s Newcastle office, said: “We are seeing people taking redundancy money and setting up in business. Some are seeing taking a driver instructor course that guarantees them work at the end and it does not materialise.
“They are ploughing £2,000, £3,000, £4,000 into this and they are not getting anything at the end of it. They are not looking into the course fully enough.”
The third Monday in January is known as Blue Monday or ‘the most depressing day of the year’ and for CCCS last year proved the busiest day of the year.
Ms Roberts said self employed people came up against particular problems when they got into debt.
“It’s not that they have larger debts. We find the self employed have more difficulty in repaying their debts because they have such irregular incomes,” she said.
“They have refinanced, they have remortgaged to keep the business going. The business is not viable and they get to the point where they can’t pay any more.”
The bad weather had affected certain trades, she added, with builders reporting that even households with snow damage were postponing repairs. “The builders are saying people don’t have the money to make the repairs,” said Ms Roberts. “We have also had a lot of publicans who have had to give up pubs. They simply say the business is not there anymore.”
She added: “The big problem we have with a self-employed person is that they mix their business side with their personal side. They can’t track business expenses from with personal expenses. They try to rob Peter to pay Paul.”
Ms Roberts said the taxman is invariably among the debtors. “The self-employed clients we get are in a mess with their taxes. They are in a mess because they have ignored it for so long. We get people who owe 5,6,7,8 years of tax.”
The Consumer Credit Counselling Service is running live updates on Monday on its @MoneyAware Twitter channel, using the hashtag #debtday.
