According to a new report by the Centre for Social Justice, personal debt in Britain has reached £1.4tn – almost as much as Britain’s economic output.
The report which is entitled ‘Maxed Out’ has shown that the average household debt has risen to £54,000, nearly double what it was 10 years ago.
The report found that poorer people are “bearing the brunt of a storm”. Almost half of households in the lowest income group spent more than 25% of their income on debt repayments in 2011.
The report also found that:
- Consumer debt has trebled since 1993 – now standing at £158bn excluding mortgage lending
- More than 8m households have no savings, including half of low income households
- Outstanding debt on credit cards has nearly trebled since 1998 to £55.6bn.
- In 2012 there were 300,000 arrears on mortgages and 34,000 repossessions. This is a reduction of 30% from the peak of the recession but a 60% increase since 2006.
The report suggests that overwhelming debt is damaging people’s mental health and wellbeing.
Bev Budsworth MD of The Debt Advisor commented “this report is helpful to highlight the plight of those less well off. However, total debt first exceeded £1.4tn in 2007 when it hit £1.43tn. Total UK debt peaked at £1.45 tn in 2010 and has declined to £1.42tn. More importantly Consumer debt has materially decreased in recent years from £232Bn in 2008 to the current level of £159Bn.”
Bev adds “additionally personal insolvency figures have also materially declined since they peaked at 133,664 in 2009 to 109,477 in 2012. Predictions are that the numbers of insolvencies for 2013 will decline further to just over 100,000. This does not however, include the numbers of people entering into debt management plans. It is estimated that there are 8 to 10 times more people opting for informal payment arrangements than for formal insolvency. With the introduction of the Protocol Compliant Debt Management Plan “P-DMP” on 1 October 2013, in my view non-lending solutions are now “fit for purpose”.
If you are struggling with debt, there are solutions available which can make your debt payments more affordable and an IVA could help you write off up to 2/3rd’s of your debt as long as you stick to the plan. The Debt Advisor were one of the 1st providers to be authorised to offer the new Protocol Compliant Debt Management Plans (P-DMP) .
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