Millions in UK Have Debts of £10,000

A recent survey suggests that almost two million people in the UK owe more than £10,000 on credit cards, overdrafts and other forms of unsecured credit.

The survey for debt consultants One Advice found that around 500,000 are in debt to the tune of £20,000. Of those owing £10,000, nearly half had taken out loans, about 350,000 had used credit cards and 83,000 had overdrafts. Others owed family and friends money.Research company Gfk NOP carried out almost 2,000 interviews between February and March.

Most personal borrowing in the UK is secured and typically in the form of mortgages, where the loan is secured against the property. Alarmingly, however, the survey found that many in the UK are running large unsecured debts, with many struggling to meet repayments and bankruptcies at record levels.Those most likely to be burdened with large amounts of personal debt are those aged between 35 and 44, with almost 650,000 people in this age group owing more than £10,000. Even more worrying is the fact that 200,000 18 to 24-year-olds owe £10,000, which equates to one in 20 people in that particular age group.

Recently consumer groups have urged the Government to take action to prevent the UK’s personal debt problem spiralling out of control. Personal loan and credit card companies in particular have come under intense scrutiny from bodies such as the Treasury Select Committee.

Chris Holmes, chief executive of One Advice, said, “ With many unsecured borrowing products having high interest rates, many people are entrapped in debt, often only paying off the interest accrued every month as opposed to the capital they have borrowed. Those caught in this situation need to take action otherwise it is likely that they will fall further into debt.”

With bankruptcies on the rise, around 70,000 people in England and Wales became insolvent, which in most cases makes it more difficult to borrow in the future having been declared bankrupt.However, the number of people reaching deals with there creditors is on the increase. These deals, called individual voluntary arrangements, involve a partial repayment, which suits both parties.

To help combat the nation’s increasing debt problem the Government announced it was providing £45m to employ 500 independent debt advisers over the next two years. The Government hope that knowledge gained from personal advice will help people in England and Wales gain control of their debts.

Organisations such as the Citizens Advice Bureau will be among those to benefit from the Governments Financial Inclusion Fund.

Alisdair Milton
17/4/06

 

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