Press Release

IT’S PAY BACK TIME FOR DEBTORSCCCS

July 26, 2005

Consumers achieved an improved payment record last quarter, according to Britain’s leading debt charity, Consumer Credit Counselling Service. CCCS manages over £1 billion of the UK's unsecured debt, free of charge to its clients. At the same time there was a £900 increase in the average debt of entrants to debt management plans since the first quarter of 2005.

The repayment difficulty index managed by CCCS fell 12 percent year on year from quarter two of 2004. It reached the lowest repayment difficulty figure recorded for any second quarter, and the second lowest quarterly figure since the index began.

The increased repayment of unsecured borrowing comes at the same time as an increase in repossession orders on housing (up 52 percent year on year for the second quarter). These repossessions come as the five interest hikes since the fourth quarter of 2003 begin to take effect on fixed rate mortgages.

High street sales have been depressed in the second quarter, with a June 2005 report from the CBI showing that the drop in high street sales was the worst for 22 years. Bank of England statistics show that credit card lending fell in April - for the first time in 11 years; consumers repaid more on their credit cards than they spent.

Chairman of CCCS, Malcolm Hurlston, said:

"Consumers are tightening their belts and working off their commitments. The consumer is spending less and repaying more. There are early signs here that consumers have realised that the never-never doesn't mean what it says.

"The rise in home repossessions will act as a wake up call to some to seek help with their finances. Often such situations result from consumers having spread repayments too widely.

"CCCS is committing extra resources to staff and systems. We are encouraged by the renewed willingness of our clients to repay their debt."

Attached: CCCS Debt Dashboard Q2 2005 (pdf)