In The News

In the News

The Debt Trap Grows

By Chris Ball. 18th September 2009.

With the economy still in the doldrums and unemployment rising at an alarming rate things do not bode well for the increasing number of people struggling to repay their debts.

The number of unemployed people in the three months to June 2009 was 2.4million up 220,000 from the previous three months and up 750,000 over the year. This is the highest figure in 14 years. 277,000 people (3,036 a day) reported they had become redundant over the three months, up 150,000 from a year earlier.

Average household debt in the UK is running at approximately £9,226 (excluding mortgages). When the average is based on the number of households who actually have some form of unsecured loan, this figure increases to £21,457.

As for the movement in the level of consumer debt during the quarter, reports are conflicting with some experts declaring a reduction in consumer debt and others quoting figures that state that there has been an increase in debt during the same period. Certainly all sides are consistent that the overall level of debt in the last 12 months has risen considerably.

Britain's interest repayments on personal debt were £65.9bn over the last 12 months, which represents an average interest paid by each household on their total debt at approximately £2,637 per year.

362 people a day are declared insolvent or bankrupt in England and Wales. KPMG estimate that this figure will increase to 411 people a day throughout 2009 or 1 person becoming bankrupt or entering into an Individual Voluntary Arrangement (IVA) every 3.5 minutes.

However, with unemployment rising and the high likelihood that interests rate will also rise in the New Year, the number of people falling into the debt trap and finding themselves unable to make their monthly payments is likely to continue to increase for a very long time to come.