Recession blamed for debt rise

The recession is largely responsible for a 25 per cent increase in the amount of debt clients at the Federation of Family Budgeting Services owe, the organisation says.

Figures released by the federation yesterday show its clients had debts averaging almost $26,000 in the year to June 2009, compared with an average debt of about $20,600 a year ago.

Chief executive Raewyn Fox said the effects of the recession were clear in the figures.

"A lot has to do with the recession - changes in circumstances, lost jobs, reduced hours," she said. "Our services are just saying 'whoa, this is so different'."

Excluding mortgages, the three largest creditor categories were banks, finance companies and Government departments, with debt coming from personal loans, credit and store cards and debt owed to the Government and courts.

The total debt from the federation's 29,500 clients amounted to more than $333 million. Personal insolvencies more than doubled to 1105 within the year.

Ms Fox said the federation was under increasing pressure and clients were having to wait a lot longer for help. Although the number of clients had not increased dramatically, the cases the federation was dealing with had become a lot more complex.

"We're having to spend a lot more time with each client".

- NZPA