UK 'grappling' against mounting debts

A significant section of the UK population is grappling with "unmanageable debt," according to research published today by the Citizens Advice Bureau (Cab).

The amount owed by more than 900 Cab clients surveyed over a one-month period averaged nearly 14 times their monthly income – almost half had found their creditors unhelpful, and a quarter were receiving treatment from their GP for stress, depression and anxiety, according to the survey.

Based on this and further analysis of over 8,000 case studies the Cab warns that the UK is "on the edge of a significant increase in personal debt problems if economic conditions decline".

It calls for a wide-ranging government review of initiatives to prevent over-indebtedness and resolve debt problems. The report also warns that the need for free, independent, face-to-face debt advice far exceeds supply, and is likely to grow far more acute.

On average, Cab clients surveyed owed £10,700, with amounts ranging from £132 to £111,000. But their average monthly income was only £800 – less than half that of the UK population at large.

Consumer credit debt was by far the biggest problem area, accounting for 70% of all the debts in the survey.

For most people the main triggers for debt problems were a change of circumstance such as job loss, ill health or relationship breakdown, as well as over-commitment and poor money management. But the level of their credit commitments relative to income meant that for many it took only a 10% drop in income to tip them over the edge of manageable payments into debt problems. Worryingly, more than half had been trying to cope with their debt problems by borrowing more.

A quarter of those surveyed were receiving treatment for stress, depression and anxiety from their GP. Just under half of these felt their symptoms had been caused by their debt problems. Clients reported that relationship breakdown, feelings of isolation and the stress of living on a tight budget had affected them deeply.

Cab debt clients are most often lone parents with dependent children, social housing tenants and low-waged or benefit dependent – or "socially and financially excluded".

Citizens Advice Chief Executive David Harker said: “The credit boom of recent years has brought great advantages to many individuals and families and helped raise standards of living generally, but it is also taking a huge toll on the lives of those who have found themselves on the wrong side of the very narrow dividing line between successfully managing credit commitments and plunging into serious debt."

Cab is the largest provider of free and independent debt and money advice in the UK through its 2,000 outlets.

(GMcG)