Less than half of Britain’s adult population carrying nation’s £1.5 trillion debt

September 26, 2014

By Lucy-Palmer Richeson.

New figures have shown that 47% of the population are shouldering Britain’s staggering debt bill of £1.5tn.

 

A third of those, around 15%, have five or more different debts that they are struggling to pay.

The report was put together by insolvency trade body R3, who say there is “cause for concern” that the UK’s personal debt is concentrated in such a relatively small percentage of people

According to Stuart Frith, chair of R3’s personal insolvency committee, “The UK’s personal debt burden is 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,” he said.

“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.”

This view is shared by research from the Debt Resolution Forum. According to the DRF, because households are struggling to handle debts because of the increase in living costs, their ‘debt resilience’ is in decline. This means they are looking for professional help with lower levels of debt problems than they did previously.

Whilst it is positive news that 53% of Brits state they are debt-free, there are three million households where debt is a massive problem. The new figures show that those aged 25-44 are most likely to have a large number of debts, with 24% of this age group having five or more loans.

On average, according to the research, British adults have 1-3 loans each. The most common debt is outstanding credit card debt.

Mr Frith said: “Personal insolvencies are already on the rise, even with interest rates at a record low. The economy may be recovering and the financial crisis long over, but the same can’t be said of the personal debt crisis that’s arisen over the past decade.”

“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.”

If you are struggling with debt, speak to one of InControl’s expert debt advisors on 0845 05 05 329 or fill out our quick enquiry form on the homepage.