The UK’s £1.5 trillion burden of personal debt rests on the shoulders of less than half of Britain’s adults, according to new research.
Fndings published on 17 September by insolvency trade body R3 revealed that 47 per cent of British adults have at least one debt, with 53 per cent debt-free. Debts included credit card balances, mortgages, bank overdrafts, student loans, bank loans, money owed to family or friends, rent arrears, utility bills, debt management plans and payday loans.
R3 said it was a cause for concern that the UK’s personal debt was concentrated in such a relatively small group of adults.
Stuart Frith, chair of R3’s personal insolvency committee, said: “The UK’s personal debt burden is well-known to be eye-watering, but it’s especially worrying to see how unevenly spread this burden is.
“The personal debt picture in the UK is one of extremes. While it’s encouraging that there are so many people out there that are debt-free, there are still plenty of people with potentially little room for financial manoeuvre. It wouldn’t take too much – an interest rate rise, for example – to turn a manageable situation into an unmanageable one.
“At the sharp end, where you have people with over five debts, the danger is that you have people caught in a debt trap: existing debts are only paid for by new ones.”
Outstanding credit card debts – where the full balance is not paid back every month – are Britain’s most common debt. Twenty per cent of British adults are behind schedule on paying at least one credit card at the end of the month.
Mr Frith added: “Formal insolvency routes will offer a way out for some – and will help creditors see some of their money back too – but reform of our personal insolvency landscape is needed. Without this, we will see people stuck in debt and stuck outside the best ways of dealing with their debts.”
Personal debt and the worry of not being able to meet financial obligations can create real emotional stresses and strains, affecting all aspects of someone’s life.
Professional advice on insolvency can be a wise investment in helping people to resolve debt issues. At Palmers, we can explore the informal and formal options available. We offer a cost-effective fixed fee appointment of up to one hour at a cost of £100 + VAT. For more information, please contact Andrew Skinner.