Reports of the debt crisis engulfing the UK are never far from our television screens or newspapers. It’s hard to argue that the global economic crisis and the recessions that affected countless economies throughout the world subsequently made it tougher for people financially. In the wake of the crisis, jobs became harder to keep and even harder to come by and wages stagnated, while the cost of living has continued to rise. In a desperate attempt to regain control, some have resorted to pay day loans in order to supplement ever-dwindling incomes, which simply serve to increase personal debt levels.
But has the level of people in debt in the UK been as accurately reported as we have been led to believe? While the total value of Britain’s personal debt now stands at a staggering £1.5 trillion, figures calculated by insolvency trade body, R3, have revealed that less than half of us are shouldering the burden of this colossal sum. In fact, they have reported that just 47 per cent of British adults are in debt. A frightening statistic in itself, it’s compounded by the finding that just a third of them, around 15 per cent of all UK adults, have the biggest debt burden by owing money to five or more organisations.
R3 has rightly pointed to the concentration of the UK’s personal debt among a relatively small group of adults as a huge cause of concern. In response to the research, the chair of R3’s personal insolvency committee, Stuart Frith, has said: ‘The UK’s personal debt burden is eye-watering, but it’s especially worrying to see how unevenly spread this burden is.’
While encouraged at the number of people found to be currently debt-free, he added that there are a high number of people on the edge financially, where it would not take much for them to be plunged into the red. Such a view is given credence by new research from the Debt Resolution Forum (DRF), which has revealed a link between rising living costs and a decline in the ability of UK households to combat debt. Attempts by debtors to find a solution to their financial difficulties is also being met with tougher measures by creditors, warns the DRF. This claim appears to have substance when you consider the recent revelations surrounding some payday lenders and high street banks that were found to have been using false or misleading solicitors’ letters to harass people in arrears.
While the research might be seen as scare-mongering in some quarters, it’s obvious that personal debt is still a huge problem for a lot of people. Ok, so the number of adults in problem debt might be less than many thought, but those in arrears or in danger of joining this unwelcome club is still far too high and shows that personal action needs to be taken. Fear of intimidatory tactics or receiving demands for payment from creditors should in no way stop people with debt problems from seeking help. If you’re in financial difficulty, getting free and independent advice, such as that offered by Council Tax Advisors, will help rather than hinder your efforts to free yourself from problem debt – every time.