Debts & Loans

Steep rises in undertaking charges are leaving bereaved relatives having to deal with debt collectors and are even delaying some funerals as families struggle to pay fees in advance.

Hefty price increases are hitting people on low incomes especially hard, as government assistance with funeral bills lags behind the costs and funeral directors resort to tough tactics to make sure they get paid.

The average cost of a modest funeral rose to £2,549 (£3,424 in London) in 2008, up by a third since 2004, according to research company Mintel.
Co-operative Funeral Services, which runs 600 funeral homes in the UK, raised its prices twice between April 2008 and February this year, increasing the cost of its basic funeral by 11%. When Cash contacted funeral homes run by Dignity, the other leading UK provider, they reported price rises of as much as 10% over the past 12 months, although a spokesman for the company said the average increase was only half this amount.

The high cost of funerals often comes as a nasty shock. "People tend not to plan for death and many clients say that it is sudden expenses like these that tip them into a spiral of debt that is hard to get out of," says Judith Moran, director of Quaker Social Action, which offers financial advice to poorer families.

Funeral directors are also reporting that customers' debts are becoming an increasingly common problem. "We have seen a significant rise in people struggling to pay their bills over the last 18 months," says John Weir of the Society of Allied and Independent Funeral Directors, whose members run 979 funeral homes in the UK. "In the past it would have been unseemly for a funeral director to ask for money upfront, but these days we have to request at least the fees to third parties in advance."

The other leading industry body, the National Association of Funeral Directors, has teamed up with debt enforcement agency the Debt Recovery Bureau (DRB) to help recover unpaid bills.

"Funeral directors are taking a far more professional approach to pursuing debts than was the case only five years ago," says Dave Cooke, head of operations at the DRB. "If a funeral director wants us to, we'll go to court and use bailiffs, attachment of earnings or even place a charge on someone's property to recover money that is owed."

Eighty-five-year-old Winifred Nunn, who lives in Mile End, east London, had to delay her husband's cremation for a month after his death in January because she could not afford to pay for his funeral. "The undertaker wanted a payment in advance, but I didn't have enough," she says. "The hospital was telling me to hurry up because I couldn't leave my husband in their mortuary. I couldn't believe this was happening and felt like I was going mad."

Eventually, after a resident warden from the estate where she lives intervened, the funeral director agreed to accept her life savings of £600 as a downpayment on the £2,400 funeral. Most funeral directors now ask for a deposit of up to £1,000 to cover crematorium charges, doctors' certificates and other third-party fees before a funeral can take place.

Nunn is waiting for the outcome of an application to the government's Social Fund funeral grant scheme for help in paying back the outstanding £1,800, but the most she can expect will be around £1,160. "I don't how I'm going to pay the rest. I try not to think about it," she says.

The Social Fund, which helped 40,000 people with funeral costs in 2007-08, pays a fixed sum of £700 towards funeral directors' fees, as well as covering cremation or burial expenses. But that fixed sum has not increased since 2003 and has fallen way behind real-term prices.

"The grant is meant to provide pensioners and others on means-tested benefits with a simple, respectful funeral, but it doesn't come close, covering barely half the cost," says Vicky Pearlman, social policy officer at Citizens Advice. "If the grant stays at its current level, it will simply add to the overall burden of debt for people on low incomes."

Linda Collins, 59, is still struggling with debts arising from her husband's death from diabetes four years ago. The Social Fund covered only half the cost of the funeral and, because Collins's husband's illness had demanded that their house be kept very warm, the couple had run up an electricity bill of more than £2,000 by the time he died.

"I hadn't realised the funeral would get me more into debt, and it made me very depressed," she says. "It took me 18 months to pay off the undertaker and I'm still paying back the electricity bill."

There are many plans that let you pay for your funeral in advance at current prices. Only 5% of UK funerals are paid for in advance, according to Mintel, compared with 50% in Germany, France and Holland, and 70% in Belgium.

But not all such plans are the same - some will not cover all the cremation and other third-party costs; neither do some pay for transportation of the body, for instance, if the death occurred away from home. So check the small print.

When there is no prepayment plan in place, it is always worth shopping around, according to Paul Dwyer, funeral cost consultant to Axa Sun Life Direct. "Bereaved people tend to approach just one funeral director," says Dwyer, "but by getting quotes from two or three firms, it is easy to achieve a saving of £200 to £300 for a like-for-like funeral."