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Debt consolidation loan could be an option for those affected by benefit cuts

07 October 2010

A debt consolidation loan could be an option for those who will be affected by the proposed cap on benefits for workless families.

Chancellor George Osborne announced at the Conservative Party conference on October 4th, that benefits for unemployed families will be capped at £500 a week from 2013.

It is thought the cap will affect 50,000 workless families who will lose on average £93 a week.

The government also revealed that it will be axing child benefit for families who earn above £44,000 a year, which could see them losing out on a substantial amount.

Single parents are the most likely to be affected by this as child benefit will only be scrapped for two parent families if they earn over £80,000.

Lizzie Irons, head of welfare at Citizen's Advice, is concerned that the government is rushing in these benefit reforms, which could plunge people into poverty.

She is particularly worried about the cap on unemployment benefits for workless families as it will be implemented regardless of household size.

Ms Irons said: "A cap of £500 a week on household benefits will price many low income families out of living in London and the south east of England altogether, and if it goes ahead will inevitably lead to widespread hardship, debt and homelessness."

Families living with financial problems already could consider a debt consolidation loan to clear it to help minimise the effects of the benefit cuts.

A debt consolidation loan simplifies a person's finances by creating one affordable repayment each month.

Advantages of this form of debt management include the fact that monthly repayments are reduced and a lower amount of interest will be accrued on the debt.

However, they are difficult to obtain if the person has a poor credit rating.

It may be worth comparing all the debt consolidation loans on the market using a price comparison site such as Moneyexpert.com to find the right one for you.
 

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