ISLANDERS faced with debt problems need lessons in money management. Citizens Advice Bureau centre manager Kate Raleigh said that people needed to become more financially literate to cope with the borrowing culture.

‘It is one of the newest, biggest problems that is going to be affecting Guernsey that we are going to have to address.’

Mrs Raleigh said that the authorities needed to promote financial education and ensure that clear information about loans was available.

She said that the bureau dealt frequently with people who had taken out loans they could not afford to pay.

She said that the average amount of money owed in Guernsey was higher than in the UK.

‘But then that might be because some people earn more and that will throw the figures out. Comparatively, the amount owed here is higher.’

Mrs Raleigh said loan consolidation packages, particularly those advertised on television, could worsen matters for borrowers.

She said there was often a clear lack of understanding on the part of the borrower that their financial situation could change over time, but that their loan would still have to be paid back.

‘Some of the adverts for the consolidators make out that there is an easy answer.’

Mrs Raleigh said there were a mixture of reasons that motivated people to take out loans. For example, some needed to borrow to afford a car to be able to work.

These were manageable, she said, provided that the borrower could afford to pay it back. But she added that some companies encouraged borrowers to take out further loans for other items and that was when trouble could arise.

‘The point is that you need to borrow, say, £4,000, but you end up borrowing more than you need to and you will need to pay that back.’

Mrs Raleigh said that people needed to be aware that the CAB existed to help them face up to their financial problems. And she said it was understandable that some people were afraid to face the situation.

‘It is hard for anyone to come along and say that there is a problem that they can’t sort out.’

She said creditors would be more likely to negotiate with people who had sought advice from the bureau. ‘If somebody has come to the CAB, then the creditors realise that person is really wanting to do something about it.’