‘I don’t have any cash left – I’m living on eggshells’: Debt advice services reveal the human misery at the sharp end of the recession

It is the voice of someone who has given up the fight. After struggling to protect her home from creditors for more than a year, she realises she has failed. It is 11.20am and Financial Mail is listening in on phone calls to debt charity National Debtline.

The caller, a middle-aged woman, has managed to fend off repossession of her home for the past year. But in concentrating her limited income on keeping her mortgage lender happy, other creditors have been ignored and have stepped up their demands.

The woman owes £26,000 through a series of credit and store cards, personal loans, a bank overdraft and catalogue shopping debts. Some creditors have gone through the courts to get charging orders on her home. Each order allows a creditor to force the sale of her home.

This is the sharp end of credit crunch Britain. Advice services such as National Debtline have experienced an explosion in inquiries over the past six months.

Adviser Aiden Tidy is trying to be the calming voice at the other end of the phone at the
National Debtline offices in Birmingham. He explains the legal process and highlights the limited choices left open to the caller.

‘I’m resigned to leaving the house,’ she says. ‘I can no longer afford to maintain it.

Again, it is a problem Aiden is familiar with. He advises that most utility companies run charitable foundations that will pay bankruptcy fees. He also arranges for an application form to be sent to the caller. The whole advice process lasts nearly an hour.

Aiden, 23, who used to work for a debt collection company, has been a debt adviser for three years.

‘The calls come from right across the income ranges,’ he says. ‘We are getting more calls from executives and professionals who have lost their jobs and cannot afford to maintain their lifestyle.’

Graham Steele is one of 90,000 borrowers who has sought advice from National Debtline. He called last October after he realised he was becoming overwhelmed by debt.

Trapped: Graham Steele is seeking bankruptcy over his £56,000 debt

Graham, 42, from Cannock, Staffordshire, says: ‘My marriage had broken up and I had been in and out of work.

‘We’d spent money we didn’t have and the loans and credit card bills were out of control. Previously, my credit record was impeccable, so I was in the position of having access to lots of credit – and that was part of the problem.’

Graham, who now works as an office administrator, owes about £56,000 of unsecured debt with little prospect of repayment based on his current income.

‘I borrowed money with every intention of paying it back, but circumstances change,’ he says. ‘I was getting lots of aggressive letters from creditors and you just feel lonely and vulnerable.

‘I called National Debtline and they were calm and reassuring. I didn’t feel judged in any way and I got the information I needed.’

Graham thinks his only option is to file for bankruptcy and he is in the process of raising the court fees he needs to do this.

Paul Mullins, National Debtline chief executive, says: ‘In January 2008 we were receiving 800 calls a day. So far this year we have averaged 1,600. It’s a reflection of what is going on out there and the rapidly deteriorating economic situation.’

There is a similar story at the Consumer Credit Counselling Service, another debt charity.

Spokeswoman Frances Walker says: ‘The phones haven’t stopped ringing since last summer. We had 3,000 calls on the first Monday of the year, which was a record for us in a single day. It has been averaging 2,000 a day since.’

Citizens Advice, which is also on the debt advice front line, has seen a big increase in the number of people with problems of secured debt, mortgages and loans linked to their homes.

National Debtline was awarded an extra £5.8million by the Government last year to pay for 50 more advisers. But even its recruitment process shows how recent redundancies are fuelling the debt crisis as last month it received more than 5,000 applications for the 50 trainee places.

One problem is that many of those struggling with debt fall into the hands of agencies who charge high fees for advice that is available for nothing.

Across the office from Aiden, Mark Pearson, 26, is helping a caller in this position. She has been quoted £400 by an agency to run a debt management plan – a formal scheme where you pay an agreed sum each month to a third party, which then splits this between your creditors.

The fee is something she can barely afford and is money that could be going to cut the overall debt.

Mark explains that organisations such as Payplan and CCCS will do the same at no cost – and suggests the caller cancels her debit card so there is no way the agency can take money from her account.

Mullins says it is always better to ask for help than to suffer in silence.

‘The earlier you call the better, but it’s never too late to seek help,’ he says.

‘If you act in a sensible and open way with your creditors, most of the time you can