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UK Debt - Statistics and Some Causes
The UK is creaking under an individual personal debt burden unheard of in recent times. In September 2010 Credit Action released it's UK Debt - Facts and Figures Report:
The average household debt in the UK excluding mortgages is £8,628. This figure increases to £18,000 if the average is based on the number of households who actually have some form of unsecured loan.
The average household debt in the UK including mortgages is £57,789.
Average consumer borrowing via credit cards, motor and retail finance deals, overdrafts and unsecured personal loans has risen to £4,467 per average UK adult at the end of July 2010.
23m plastic card purchase transactions will be made today with a total value of £1.101bn. The Office for Budget Responsibility (OBR) predicts that household debt will be £1,823bn by end 2015 which is a growth of £159m a day. This would take the average household debt to £72,341 per household
Total UK personal debt at the end of July 2010 stood at £1,456bn. The twelve-month growth remained at 0.8%. Individuals owe more than what the whole country produces in a year.
103 properties were repossessed every day during Q2 2010
The Insolvency Service said there were 34,743 individual insolvencies in England and Wales (381 people a day or 1 every 3.78 minutes) in Q2 2010 on a seasonally adjusted basis. This was a decrease of 2.6% on the previous quarter and an increase of 5% on the same period a year ago. Source: Credit Action
So what are the causes of debt?
Debt can be caused by innumerable situations, in fact far too many to list here, however some of the more important causes, which we will look at here are those such as bereavement, redundancy, relationships breakdown, ill health, gambling and lender actions.
Bereavement
This is a far more common cause of debt than is readily recognised. Funerals are expensive and many people find themselves having to take on debt in order to pay for the funeral costs of the deceased. Commonly, most funerals have to be paid before any inheritance is received. Other situations where debt can be incurred after death are when, a) an outstanding debt was in joint names and the remaining party becomes liable for the full balance, b) third party guarantees; the debt will pass to the guarantor and c) any debt has to be paid out of the estate of the deceased.
Redundancy
Debt due to loss of work can cause significant difficulties within the family unit. The underlying psychological problems associated with unemployment only serve to exacerbate the difficulties when having to confront problems of outstanding debt. The lack of insurance provision such as mortgage and rent payment protection has also contributed to the increase in the numbers of people incurring debt as a result of unemployment.
Breakdown in Relationships/Divorce
The situation caused by a breakdown in a relationship can lead to financial hardship for both sides of the dispute. Debts from joint account personal loans, credit cards, catalogues all have to be divided up adding to the stress already endured. Add to this legal costs and the inevitable relocation costs for at least one of the parties, it is easy to see how debt can be incurred.
Ill Health
The occurrence of ill health can lead to many additional expenditures which can cause a person to fall into debt. Extra medicinal costs, extended periods off work, caring costs or rehabilitation all take their toll. To make matters worse in some cases, it is the actual indebtedness that can cause to a great extent, a person's illness. Add to this the fact that a person who is unwell may not be able to face up to their financial problems and you have a recipe for serious financial difficulty.
Gambling
Gambling is a recognised disorder and perhaps should be treated as any other illness. However the compunction to spend money gambling is accentuated when the gambler starts to borrow more money in order to maintain his or her habit. This is a vicious circle of the worst kind. For the gambler there is no other solution other than to keep borrowing, keep betting, keep borrowing, keep betting. Looking for the ever elusive way out and knowingly yet unavoidably racking up unsustainable debts.
Lender Actions
When a person in debt starts to miss their monthly contractual payments, their lender will naturally and legitimately levy charges and additional interest until the account is brought up to date. This in turn creates a snowball effect which only leads to more debt and less ability to pay. There is a great deal of argument over whether these surcharges have been excessive or unfairly implemented, or not, as the case maybe. Indeed, has credit been to easy to come by? However, I'm not here to knock the lenders. Where would we be without them?
Finally, the debtors own attitude can be a significant factor when faced with increasing debt. Refusing to face up to the situation, keeping the creditors in the dark and not explaining personal circumstances or not attending court hearings will all contribute to a worsening of the situation. In the majority of cases, indebtedness has nothing to do with irresponsibility but is caused by factors beyond the person's control. If we were more aware of this then perhaps many of the distressing situations so common nowadays could be avoided.
UK UNSECURED DEBT ADVICE offers professional support and advice on a range of flexible and modern financial services. For information on Debt management Plans or IVAs and others solutions visit http://sites.google.com/site/adebtblog.Article Source: http://EzineArticles.com/?expert=David_Larthe
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Legal Resoruces
Dealing With Debt Part 1
Dealing With Debt Part 2
Dealing With Debt Part 3
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