Extreme Problem Debt ‘Affecting 1.6 Million UK Households’
August 25, 2016
As many as one in 16 British households are dealing with what is considered to be ‘extreme problem debt’, according to a new report on the subject.
Information collected on behalf of the Trades Union Congress (TUC) and Unison suggests that there are now close to 1.6 million British households in extreme problem debt, with that categorisation used to refer to families or individuals who pay out more than 40 per cent of their gross annual income to cover unsecured debt repayments.
Meanwhile, roughly 3.2 million UK households are understood to be faced with what the TUC’s researchers define as being ‘problem debt’, meaning that they pay out at least 25 per cent of their income towards making unsecured debt repayments every year.
Worryingly, the number of Brits who are categorised as having extreme problems with debt has been increasing sharply in recent years among households with low level incomes.
According to the latest data, the proportion of low income households with extreme problem debt increased from 5 per cent in 2014 to 9 per cent in 2015.
In the TUC and Unison’s report, the scale of problem debt around the UK is blamed in no small part on a “collapse in the value of wages” across the country.
The report concludes that while the total value of unsecured debt is lower in the UK now than was the case prior to the 2008 financial crisis, the debts that remain outstanding have become more burdensome to families and individual debtors nationwide.
“Families can’t continue relying on credit cards and loans to get by. But with the average weekly wage still worth £40 less than before the 2008 crash, lots of families have little choice,” said the TUC’s general secretary Frances O’Grady.
“Higher wages must be at the heart of the government’s economic plan. We need a return to proper year-on-year pay rises, and a higher national minimum wage.
“The government must also do more to help low-income families struggling with problem debt in getting access to debt restructuring and insolvency support.”
If you live anywhere in Scotland and are struggling with problem debt then Scotland Debt Solutions can help. Contact one of our four offices to find out more and to arrange a free consultation.
The start of a new year is the perfect time to take stock of your finances and put plans in place for a financially savvy year ahead. While you may feel your problems are insurmountable, there are always things you can do to help, most of them surprisingly easy. Here are 7 ways you can […]
If you have credit card debt which is attracting a high level of interest, moving this balance onto a lower interest card could save you a considerable amount of money. This process is known as a ‘balance transfer’, and if done correctly, this process could save you money and also reduce the time it takes […]
Many thousands of young Brits are being actively encouraged towards taking on debt and spending borrowed money even before they reach their 18th birthdays. That’s according to the price comparison website comparethemarket.com, whose research suggests that roughly one in four 16 and 17 year olds in the UK have been offered credit cards or asked […]
If you’re in serious debt with no hope of repaying your unsecured creditors, you don’t have to wait for a creditor to take legal action against you. You may be able to take matters into your own hands and apply for sequestration (bankruptcy in Scotland). This also prevents your situation from worsening. There are two […]
If you’re looking to save some money it’s a good idea to make a detailed budget that lets you see where your cash is currently being spent, and offers an overall view of your finances. You’ll need to collect together your income and expenditure details, including annual costs such as insurance, car expenses, birthdays and […]
Scotland has a number of formal debt solutions that can help you deal with a difficult financial situation. It’s advisable to take action as soon as possible, however, to prevent your levels of debt escalating when interest and other charges are added. Obtaining professional advice is key in this respect. An approved money advisor or […]