Pawn business brisk as debts get worse

Personal debt in Britain is now reaching record levels.

reports on how the crisis affects the West Midlands. Thousands of people in the West Midlands are facing financial ruin after overstretching their spending.

See also: Your guide to getting out of the debt trap

Alarming figures today reveal the extent of the debt crisis hitting this region. And in a week in which the UK is at the centre of an economic crisis and warnings of recession, experts say the problems will only get worse.

Debt helplines are busier than they have ever been and pawnbrokers say they are enjoying a record trade because people are desperate to raise some money.

A crisis meeting is being organised next week in a bid to get hundreds of millions of pounds of personal borrowing under control in the debt-wracked West Midlands.

It is the first conference of its kind but more seem sure to follow as bills soar and cash problems spiral out of control.

National Debtline received more than 8,000 emergency calls for help from the West Midlands last year and forecast: "It's going to get much worse."Sandwell Citizens Advice Bureau (CAB) helped 17,500 people with £32 million of debt in just nine months last year but warned that was just the tip of the iceberg because their assistance is only sought as a last resort and several other agencies offer similar guidance.

Deborah Horton, general service manager for CAB Sandwell, who worked out the figures, said today: "They were so awful that I thought that I had put the decimal place in the wrong place."

Pete Myford, a specialist legal adviser on money matters based in Wolverhampton, where the number of full time debt advisers doubled last year to cope with increasing demand, added: "The next two or three years will be very stormy. There is so much ignorance. Money used to be what was in your wallet. Now it is just numbers on a piece of paper that comes through the letter box once a month. I am particularly worried about home repossessions."

The Royal Institute of Chartered Surveyors predicts 43,000 of these this year - 123 per day - and many of those are anticipated in the West Midlands. Personal bankruptcies declared at Wolverhampton County Court have quadrupled over the last six years. There were 430 cases last year with numbers expected to continue to rise.

Now officials in Sandwell are leading the region's fightback with a Tackling Debt conference at West Bromwich Albion football ground on January 31.

It is expected to be attended by over 130 key figures ranging from the borough's councillors to BBC financial expert Paul Lewis, who presents Radio Four's Moneybox and other programmes. It has been set up by CAB Sandwell and the council's welfare rights group in conjunction with the Sandwell Partnership. Deborah Horton said: "Personal debt has got to such an extent that it must be dealt with immediately. Attitudes have got to change before it is too late - and this meeting is the first step. But the situation in our area is no worse than anywhere else in the West Midlands and I expect similar conferences to follow throughout the region."

One aim of the meeting is to persuade banks to be more realistic with their lending. Pete Myford added: "This week I saw a couple on income support who were loaned £1,000 by a major bank just before Christmas and were told to list details of their benefits as earned income."

The credit crunch has driven increasing numbers of people to seek alternative ways of getting cash quickly. Danielle Bellamy, manager of Carats pawnbrokers in Wolverhampton city centre, said: "Business is brisk but not booming yet. That might follow later in the year because it takes three or four months for the effects of the economy to start reaching us.

"We are doing about ten pawns a day compared with seven last year. They vary from £10 to £900 with the average about £300.

"Most involve jewellery and watches. We also cash cheques of up to £5,000 and this is a growing part of the business. Our customers range from people with their own businesses to the unemployed."

Carats sales assistant Linda Head added: "There is no shame in debt now. People talk quite readily about the circumstances that prompt them to pawn items. Increasing numbers are coming in the first time but for many youngsters it is becoming a way of life.

"They pawn a piece of jewellery on Monday, get it back at the weekend and bring it in again the following Monday."

The fact that the quantity of broken gold jewellery being sold for cash has doubled is another indicator of the region's money worries and so is the amount of pawned jewellery not being redeemed.

An astonishing 80,000 of these items from pawnbrokers based within the region and beyond were put on sale by Birmingham auctioneers Fellows & Son last year.

Stephen Whittaker, managing partner of the 130-year-old firm, said to handle about 30 per cent of the nation's unredeemed pledges, said: "Most are pieces of gold-based jewellery. This is a growing side of the business because of increasing mortgage payments, rising taxation and the demand for ever-inc-reasing standards of living. Pawnbroking is one of the few ways of getting your hands on cash relatively easily."