Helping those drowning with huge personal debts

Daily Echo: Helping those drowning with huge personal debts Helping those drowning with huge personal debts

THREE years ago Helen Eatwell was around £10,000 in debt.

She had borrowed cash from payday loan companies, owed money to catalogues and was running up charges with her bank from defaulting on direct debits and standing orders.

The single mother of two was dependent on benefits and was taking out loan after loan to pay for basics for her children, because the interest payments and charges she was facing were eating up so much of her money.

Then she heard about the Hampshire Credit Union (HCU) and everything changed.

She became a member and took out an account with them in October 2009. They helped her to manage her debts and begin to save money – she hopes to be completely debt-free by April.

They also took her on as a volunteer, in return training her for an NVQ in business and administration. She has since gone on to complete her levels two and three and found work with Sentinel Housing Association.

She admits that she can hardly believe how much the credit union has changed her life.

“I’m quite chuffed now,” she says. “I’m not wondering if the door is going to go and it’s going to be a bailiff. We are now able to live, not just scrape by. We don’t have loads of money, but we’ve got a little bit so we can manage a treat like a take away or a day out without having to worry.

It’s worked out well.”

Helen is just one of thousands of people who have been helped by HCU, also known as United Savings and Loans, to break the cycle of debt. And the people who run HCU would like to help thousands more like her – but find that most people just don’t know what a credit union is.

In many ways, credit unions function like banks, offering loans and bank accounts. The main difference is that they do not have external shareholders and are instead run for and by members as a notfor- profit organisation.

Hampshire Credit Union was established in Portsmouth in 2001 and now has outlets throughout Hampshire and the Isle of Wight.

They provide savings accounts, affordable loans and current accounts for all members, and pride themselves on presenting a friendly face, reaching out to the community and lending a helping hand. Credit unions are mostly set up on a community basis, with the whole ethos being keeping money local,” says Alistair Webb, project officer at the HCU, adding that it is fully regulated by the Financial Services Authority.

“The only stakeholders are our members. That means that when the organisation makes money, that’s returned to our members through dividends on their savings accounts. If you borrow from us, that money is staying local. You’re not giving it away to a big multinational company, which is then sorting out its own shareholders.”

Alistair hopes that more and more people will come to the HCU for their loans and bank accounts rather than to payday loan companies and banks that may have hidden charges.

Sam Wilkes-Holmes, who started with HCU as an apprentice and is now an office supervisor, says that many people get into worse financial problems because they sign up for loans, accounts and products without fully understanding them. “For example, if people miss a payment on a payday loan they can find that the next time there is money in their account the whole sum is removed,” he says.

“I’ve seen £600 be taken out in one day. Subscriptions are another example – people sign up to something for free then don’t cancel in time and have to pay for it.”

HCU offers its customers loans at attractive rates.

Alistair explains: “Borrowing £500 over 12 months from HCU would cost the member £563. Using a doorstep loan agent, the same loan would cost £910 – so for every £100,000 borrowed from doorstep lenders, £70,000 is sucked out of the community.

“The more people use these companies, the more money is sucked out of the area. We like to think that if you’re keeping your money local, you might be spending local as well.”

Although loans are an important part of what HCU does, around half their members have bank accounts. Alistair admits that there is a perception problem with credit unions – when people do know what they are, they tend to think of them as a “poor man’s bank”.

But he says that’s far from the case, with HCU offering a range of accounts, including savings schemes and a “jam jar” account, which helps people to budget their spending for different areas.

They think this will be particularly important when Universal Credit is introduced for benefit claimants, which will see a single benefit paid to the recipient on a monthly basis, rather than the current situation of fortnightly payments with council rents being paid directly.

“You’ve got people who have been receiving £120 a fortnight and they’re going to have £800 at once, so the temptation for some people will be to be reckless with it,” says Sam.

HCU doesn’t have the money for advertising campaigns and says that the people who would most benefit from their services are often the hardest to reach. The vast majority of their customers come through word of mouth, with many referred on by agencies such as housing associations.

They want to get the word out to more people across the county that whatever their financial situation, the HCU is there for them.

With many people still feeling wary of the big banks, perhaps the time for small, local credit unions is here.

n Hampshire Credit Union has offices in Southampton, Fareham, Winchester, Newport, Portsmouth, Andover and Basingstoke. For more information about Hampshire Credit Union, visit usal.org.uk or call 023 9282 7980.

Comments (11)

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1:17pm Sun 10 Feb 13

Pikey Pete says...

At the very least they should wear arm bands and rubber ring.

Plus don't swim with sharks.

I know they feel they have no choice. But if you take on a debt you know it will cost you.

We all bailed out the banks and they dont even lend us our own money we paid to them.

The worst thing we ever did was bail them out.

Iceland refused and now has one of the best economies in the world.!!!
At the very least they should wear arm bands and rubber ring. Plus don't swim with sharks. I know they feel they have no choice. But if you take on a debt you know it will cost you. We all bailed out the banks and they dont even lend us our own money we paid to them. The worst thing we ever did was bail them out. Iceland refused and now has one of the best economies in the world.!!! Pikey Pete
  • Score: 0

3:24pm Sun 10 Feb 13

Torchie1 says...

**** Pete wrote:
At the very least they should wear arm bands and rubber ring.

Plus don't swim with sharks.

I know they feel they have no choice. But if you take on a debt you know it will cost you.

We all bailed out the banks and they dont even lend us our own money we paid to them.

The worst thing we ever did was bail them out.

Iceland refused and now has one of the best economies in the world.!!!
Before you get too carried away, Icelands population is only 82000 greater than Southampton and the GDP in 2011 was $14.03 Billion. Recognise that you are comparing the turnover of your local grocer with that of Tesco before saying the UK economy should be performing the same as Iceland.
[quote][p][bold]**** Pete[/bold] wrote: At the very least they should wear arm bands and rubber ring. Plus don't swim with sharks. I know they feel they have no choice. But if you take on a debt you know it will cost you. We all bailed out the banks and they dont even lend us our own money we paid to them. The worst thing we ever did was bail them out. Iceland refused and now has one of the best economies in the world.!!![/p][/quote]Before you get too carried away, Icelands population is only 82000 greater than Southampton and the GDP in 2011 was $14.03 Billion. Recognise that you are comparing the turnover of your local grocer with that of Tesco before saying the UK economy should be performing the same as Iceland. Torchie1
  • Score: 0

6:07pm Sun 10 Feb 13

chrisja says...

I'm confused, is this an article or an advert for Hampshire Credit Union? I feel like I've got Barry Scott rining in my ear...
I'm confused, is this an article or an advert for Hampshire Credit Union? I feel like I've got Barry Scott rining in my ear... chrisja
  • Score: 0

6:11pm Sun 10 Feb 13

cantthinkofone says...

CAP are also a lifesaver for those with debt problems.
CAP are also a lifesaver for those with debt problems. cantthinkofone
  • Score: 0

6:48pm Sun 10 Feb 13

solomum says...

More needs to be done to stop people falling in the debt trap in the first place. Money management should be a compulsory subject at school. The universal credit is a recipe for disaster as this will be putting money in the hands of people who cannot already manage the money that they have coming in. How many people are going to find themselves homeless because they do not use it to pay their rent? I fully understand the governments desire to make people more responsible for managing their money, but for a lot of people, it is a skill that has never been learned and never will be learned. Focus on teaching the youngsters to become responsible adults and in years to come the country may just reap the benefits of this teaching rather than our future adults relying on the state for help.
More needs to be done to stop people falling in the debt trap in the first place. Money management should be a compulsory subject at school. The universal credit is a recipe for disaster as this will be putting money in the hands of people who cannot already manage the money that they have coming in. How many people are going to find themselves homeless because they do not use it to pay their rent? I fully understand the governments desire to make people more responsible for managing their money, but for a lot of people, it is a skill that has never been learned and never will be learned. Focus on teaching the youngsters to become responsible adults and in years to come the country may just reap the benefits of this teaching rather than our future adults relying on the state for help. solomum
  • Score: 0

7:23pm Sun 10 Feb 13

SaintM says...

People spend money othey have not got on things they do not need so they deserve what they get
People spend money othey have not got on things they do not need so they deserve what they get SaintM
  • Score: 0

9:50pm Sun 10 Feb 13

solomum says...

SaintM wrote:
People spend money othey have not got on things they do not need so they deserve what they get
Whilst I agree somewhat with your post, it is not always spending on things that are not needed that get people into debt. A lot of people just have no idea how to budget or to prioritise. There is a huge element of greed to debt, but there is also a complete lack of money management skills, and a lot of people living on a very small budget that have very little skills to help them manage their money. Yes, a lot of people do put themselves in this position, but their are also people who just do not have enough money coming in to cover all the bills and essentials and what may seem like a small loan/overdraft to tide them over then gets out of hand. If youngsters are taught budgeting skills from an early age, we can look forward to a future without huge debt problems.
[quote][p][bold]SaintM[/bold] wrote: People spend money othey have not got on things they do not need so they deserve what they get[/p][/quote]Whilst I agree somewhat with your post, it is not always spending on things that are not needed that get people into debt. A lot of people just have no idea how to budget or to prioritise. There is a huge element of greed to debt, but there is also a complete lack of money management skills, and a lot of people living on a very small budget that have very little skills to help them manage their money. Yes, a lot of people do put themselves in this position, but their are also people who just do not have enough money coming in to cover all the bills and essentials and what may seem like a small loan/overdraft to tide them over then gets out of hand. If youngsters are taught budgeting skills from an early age, we can look forward to a future without huge debt problems. solomum
  • Score: 0

11:29am Mon 11 Feb 13

BeckyL1 says...

Thank you for printing this. I've never been in debt myself, but I know plenty who have. Most of them have had to take on debt in a situation such as job loss, or to cover unexpected bills which are seen as just temporary. They were lucky enough to understand the responsibility of what they were taking on - and they also recognised it as debt or "credit" and not money that they could use as their own. However, there are many people out there who have never had the education about debt and what they are taking on. They turn to places like Payday Loans companies because they think they have no option (personally I think they should all be closed down). But what a difference a Credit Union could make? I'd never even heard of one before I read this article, and I shared it with some of my friends, who all said that had they known about a Credit Union in their area they would have been less likely to take on a payday loan. More people like Hampshire Credit Union, who are the good guys, need to come forward and stamp out payday loans companies for good! Thank you for the article
Thank you for printing this. I've never been in debt myself, but I know plenty who have. Most of them have had to take on debt in a situation such as job loss, or to cover unexpected bills which are seen as just temporary. They were lucky enough to understand the responsibility of what they were taking on - and they also recognised it as debt or "credit" and not money that they could use as their own. However, there are many people out there who have never had the education about debt and what they are taking on. They turn to places like Payday Loans companies because they think they have no option (personally I think they should all be closed down). But what a difference a Credit Union could make? I'd never even heard of one before I read this article, and I shared it with some of my friends, who all said that had they known about a Credit Union in their area they would have been less likely to take on a payday loan. More people like Hampshire Credit Union, who are the good guys, need to come forward and stamp out payday loans companies for good! Thank you for the article BeckyL1
  • Score: 0

11:38am Mon 11 Feb 13

BeckyL1 says...

solomum wrote:
More needs to be done to stop people falling in the debt trap in the first place. Money management should be a compulsory subject at school. The universal credit is a recipe for disaster as this will be putting money in the hands of people who cannot already manage the money that they have coming in. How many people are going to find themselves homeless because they do not use it to pay their rent? I fully understand the governments desire to make people more responsible for managing their money, but for a lot of people, it is a skill that has never been learned and never will be learned. Focus on teaching the youngsters to become responsible adults and in years to come the country may just reap the benefits of this teaching rather than our future adults relying on the state for help.
Thank you solomum, I completely agree. It is still very easy to take on debt and there are plenty of places, like Payday Loans companies, that are willing to offer it. Sadly, because their motives are often commission based, they are more keen to shift the loans out to people and don't care about the effect on the people they are giving them to. More needs to be done to ensure that people are helped out with managing money and budgeting - something which just does not occur to so many people. The jamjar accounts that are mentioned above - so simple! A concept which in everyday situations are almost mundane, but to people who have never had the education about debt, budgeting and the responsibility that comes with it, it could mean the difference, as you say, between a house and homelessness.
[quote][p][bold]solomum[/bold] wrote: More needs to be done to stop people falling in the debt trap in the first place. Money management should be a compulsory subject at school. The universal credit is a recipe for disaster as this will be putting money in the hands of people who cannot already manage the money that they have coming in. How many people are going to find themselves homeless because they do not use it to pay their rent? I fully understand the governments desire to make people more responsible for managing their money, but for a lot of people, it is a skill that has never been learned and never will be learned. Focus on teaching the youngsters to become responsible adults and in years to come the country may just reap the benefits of this teaching rather than our future adults relying on the state for help.[/p][/quote]Thank you solomum, I completely agree. It is still very easy to take on debt and there are plenty of places, like Payday Loans companies, that are willing to offer it. Sadly, because their motives are often commission based, they are more keen to shift the loans out to people and don't care about the effect on the people they are giving them to. More needs to be done to ensure that people are helped out with managing money and budgeting - something which just does not occur to so many people. The jamjar accounts that are mentioned above - so simple! A concept which in everyday situations are almost mundane, but to people who have never had the education about debt, budgeting and the responsibility that comes with it, it could mean the difference, as you say, between a house and homelessness. BeckyL1
  • Score: 0

9:41am Tue 12 Feb 13

MoshyOnline says...

chrisja wrote:
I'm confused, is this an article or an advert for Hampshire Credit Union? I feel like I've got Barry Scott rining in my ear...
Most articles are. Just sayin'
[quote][p][bold]chrisja[/bold] wrote: I'm confused, is this an article or an advert for Hampshire Credit Union? I feel like I've got Barry Scott rining in my ear...[/p][/quote]Most articles are. Just sayin' MoshyOnline
  • Score: 0

9:45am Tue 12 Feb 13

MoshyOnline says...

I just wanna say that I switched over to my CU last year and they've really helped me get on with my money. You don't have to use them for loans. They're like a bank that doesn't rip you off and actually cares about you & not just what products they can up-sell you. I think this article is great as obviously there are some very confused people out there.
I just wanna say that I switched over to my CU last year and they've really helped me get on with my money. You don't have to use them for loans. They're like a bank that doesn't rip you off and actually cares about you & not just what products they can up-sell you. I think this article is great as obviously there are some very confused people out there. MoshyOnline
  • Score: 0

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