Britons struggling with debt will double in 2008
16 April 2008 11:08:58
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| Hard times looming for Britons with bad debts |
According to a report published today the number of Britons experiencing debt difficulties will double during the course of 2008 as the tightening on lending criteria limits their refinancing options.
Estimates indicate that around one million people are struggling with “problem” unsecured debts adding up to a total of £25bn – equivalent to £25,000 each on average – according to the debt management solutions firm, TDX Group. TDX’s clients include lenders HSBC, HBOS and Alliance and Leicester.
Around 60% of the £25bn is debt owed on credit cards and the majority of the rest is outstanding on personal loans.
The report, called ‘UK Problem Debt – consumer crisis or efficient market?’, warns that more people will soon be experiencing financial difficulties as a result of changing economic conditions, including an increase in personal inflation and the recent slowdown in the property market.
Additionally, it says that those wishing to manage their debts are likely to struggle to find suitable solutions because of the major impact of the recent credit crunch and tighter lending criteria.
“There will be fewer refinancing solutions such as re-mortgaging and homeowner loans available, because banks and building societies have tightened up their lending criteria,” said a spokesman for the firm.
“This could mean there could be a doubling in the number of people taking out repayment plans such as individual voluntary arrangements (IVAs) and debt management plans.”
An IVA is an alternative to bankruptcy which allows borrowers to restructure their debts into more manageable repayments. In 2007, an estimated 58% of those people struggling to keep up with their debts took out IVAs.
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