The UK’s £1.5tn+ of personal debt is owed by under half of Britain’s adults, according to research by insolvency trade body R3. Just over half (53%) of British adults told an R3/ComRes survey that they were debt free. 47% of British adults said they had at least one debt; 15% said they had five or more.
R3 says the fact that the UK’s personal debt is concentrated in such a relatively small group of adults is a cause for concern. The Chair of R3’s Personal Insolvency Committee, says: “The UK’s personal debt burden is well known to be eye-watering but it’s especially worrying to see how unevenly spread this burden is.”
“The personal debt picture in the UK is one of extremes. While it’s encouraging that there are so many people out there that are debt free, there are still plenty of people with potentially little room for financial manoeuvre. It wouldn’t take too much – an interest rate rise, for example – to turn a manageable situation into an unmanageable one.”
R3 adds: “At the sharp end, where you have people with over five debts, the danger is that you have people caught in a debt trap: existing debts are only paid for by new ones.” The survey found that those aged 25-44 are most likely to have extreme numbers of debts, with a quarter (24%) of this age group having five debts or more.
In these age groups:
– 582,759 people are behind on five or more credit card bills
– 445,640 people have five or more mail order nolvadex online, or catalogue debts
– 411,360 people have five or more bank overdrafts
R3 comments: “Personal insolvencies are already on the rise, even with interest rates at a record low. The economy may be recovering and the financial crisis long over, but the same can’t be said of the personal debt crisis that’s arisen over the past decade.” “Formal insolvency routes will offer a way out for some – and will help creditors see some of their money back too – but reform of our personal insolvency landscape is needed. Without this, we will see people stuck in debt and stuck outside the best ways of dealing with their debts.”