Personal Loan Debt In The UK Still Increasing
Despite the fact that the credit crunch and recent recession in the UK have made many individuals rethink their personal financial situation and make a positive effort to reduce the amount which they owe on their personal loans and credit cards, a new survey form the charity Credit Action has shown that the average level of debt on loans and credit cards in the UK is still increasing, although the rate of the increase has slowed down over the course of the year.
The rate of debt growth in the UK has slowed by an average of 0.1 per cent between July and August this year, to give an annual debt growth rate of 0.8 per cent.
Although 0.8 per cent may sound fairly insignificant, the total amount of outstanding personal loan and credit card debt now stands at £1,457 billion. This equates to an average of £4,760 of unsecured borrowing for every adult in the UK, excluding mortgages and home owner loans. If only those individuals who already hold personal loans and credit cards are taken into account, then the average increases to £21,457 per person.
This level of personal loan debt, coupled with the current state of the UK economy has meant that a growing number of borrowers are facing difficulty in repaying their loan and card debts. Many are looking at debt consolidation loans as an option to ease their monthly repayments, or in more extreme circumstances an Individual Voluntary Arrangement (IVA) could be an option.
Despite a large number of people taking these options, Credit Action have said that over the course of the month of July this year, on average one person was declared bankrupt every 3.97 minutes. Although the credit situation is now tightening up and borrowers are becoming more aware of the potential problems, it seems that the culture of irresponsible lending and borrowing of the past few years is still catching up with us all.
