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 five offices to find out more and to arrange a free consultation.

John Baird

Insolvency Adviser

Tel: 0800 063 9250

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