What Is The Main Cause Of Loan Debt Problems?
More and more individuals across the UK are falling into serious debt through personal loans and credit cards at the moment and whilst many people still think of excessive loan debts as an embarrassing problem, there are a growing number of people in the same situation and loan and card debts don’t seem to carry the same stigma as they used to.
In order to help individuals sort out their personal loan and other debt problems, there are a growing number of debt charities which have been set up specifically to help people with such matters, including the Citizens Advice Bureau, The Consumer Credit Counselling Service (CCCS) amongst several others.
In the past, one of the main reasons for people having an uncontrollable amount of loan and credit card debt was often due to bad planning and financial management, with people just taking out more personal loans and spending on credit cards without regard for the consequences of their actions.
Although overspending and taking out too many loans in the first place is still a large problem, this only accounts for around 9.9 per cent of bad loan debt cases, according to statistics from the CCCS.
The main reason given for loan debt problems these days tends to be either through redundancy, which accounts for 24.8 per cent of cases, or a loss of household income (23.3 per cent). Other top reasons for loan debt problems include: separation or divorce, illness or injury and a lack of budgeting and paying living expenses with loans and other credit.
The figures also show a wide range of age groups with loan debt problems, from young people who have overspent on their credit cards and pay day loans, all the way through to people who are retiring with outstanding significant loan debts.
A survey by the debt trade body R3 found that 39 per cent of the population are worried about their loan debts, but only around three per cent are planning to do anything about it within the next six months.
