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.
Your personal credit score plays an important part in securing new loans and credit, and can affect your financial life for better or worse. Lenders use the information in your credit file to determine whether you present a high risk of default, and if your credit score is low, you may find it difficult to […]
Credit unions offer a range of financial products including current accounts, savings accounts, and loans, and can be a good alternative to banks and building societies whilst also helping your cash flow. There are credit unions all around the UK, almost 100 of them operating in Scotland. They’re not always widely advertised, however, and although […]
It’s a worrying situation when you realise your outgoings exceed your income, and it can be difficult to prevent debt in this situation, but there are solid steps you can take to get back on track – you just need to act quickly. Increasing your income or reducing the money going out are essentially what […]
If you’ve lost your job, state benefits and tax credits can provide vital financial support to see you through this tough time and help you avoid taking on too much debt while you look for more work. As far as your old employment is concerned, it’s important that you check your final wage slip to […]
If you are a Scottish resident in financial difficulty, you may have entered into a Trust Deed in order to restructure debt repayments to creditors. A Trust Deed is a fixed voluntary agreement made between the debtor and creditor, with the help of a trustee. Debt is broken down into smaller, affordable instalments, typically lasting […]
A Debt Arrangement Scheme (DAS) is a government backed scheme which allows you to repay debt through contractual, monthly instalments without the threat of legal action and incurring penalties or interest. The scheme was established in 2004 for Scottish residents in debt, providing an alternative solution to sequestration, the Scottish equivalent of bankruptcy. A Debt […]