Fairly recent figures are that UK personal debt stands at over £1,450 BILLION pounds. £1,250 Billion of this is secured lending on property (mortgages for example) leaving £200 Billion+ representing everyday consumer credit.
Most people are in debt to some extent but millions have more debts than they can afford to pay off. Average household debt (excluding mortgages and unsecured lending) is £8,042 per household. Including mortgages this average household debt figure rises to £55,582.
The scary debt facts are that approximately 330 people will be declared insolvent or bankrupt each day – about one person every 5 minutes of every day. Nearly 1,400 County Court Judgements are issued every day with an average amount of just under £3,500. Almost 100 properties are repossessed every day.
Bad credit history and debt problems are often as a result of a change in circumstances – unemployment being one of the main reasons and with over 1,500 people are being made redundant daily and over 800,000 people being unemployed for 12 months or more it’s easy to see why.
This bad debt costs the financial institutions dearly – in April, May and June 2011 £2.06bn of debt was written off by these institutions. £1.15bn of this was credit card debt. Debt write off currently stands at over £22 million each day with UK banks, building societies and financial institutions writing off £8.0bn of loans to individuals in the last 12 months.
Managing debt responsibly and reliably creates a good credit history but is often difficult to do – a change in circumstances, loss of job, illness or just the rising cost of living can create problems with not enough income to pay the outgoings. Tempting “solutions” initially may be to turn to credit cards or short term loans which can compound the problems.
Exceeding credit card or overdraft limits may be a start of a bad credit history and as soon as you’re late making a payment on a credit card or loan it’s reported to a credit bureau and is a black mark on your credit history, failing to make payments at all is recorded by the credit bureaus and will eventually lead to the money owed going to “collections” and eventually to court and, if judgement is found in favour of the lender, a county court judgement or CCJ is registered on your credit file.