3.2 Million Households Struggling With Debt

Research by the Consumer Credit Counselling Service has found that more than 3 million households are struggling with debt – including more than a million which are battling to pay their mortgage.

Growing numbers of Britons face a mountain of debt, household budgets are squeezed and more people are struggling to stay on top of their obligations – so there’s little wonder many are defaulting.

In its Debt and Household Incomes report, the Consumer Credit Counselling Service (CCCS) found that 3.2 million households are either three months behind on repaying a debt or some form of debt action is being taken against them.

A further 3 million are having difficulty making ends meet and are likely to be driven further into debt by untimely rises in household bills.

Analysis of the CCCS’s data paints a revealing picture of debt across different income brackets in the UK. According to the charity, clients who earn up to £13,500 per year have unsecured debts that exceed their annual income by a fifth, while those earning between £25,000 and £50,000 have unsecured debts to the value of 95% of their annual income.

Those on benefits have the highest unsecured debt to income ratio, owing on average 124% of their annual income in unsecured loans and credit card debt.

This problem is made worse by the fact that more than a third of CCCS clients earning between £13,500 and £25,000 per year have no money left at the end of the month to repay unsecured debts. This compares to a quarter of of those earning between £25,000 and £50,000.

CCCS chairman, Lord Stevenson, said, “These figures confirm our fears – that troubled times lie ahead for many people in the UK. This report shows the pain is going to spread wider and affect many more people than many commentators have previously assumed.

Moneyhighstreet comments: “Key pressures facing households in debt are jumps in energy prices and higher interest rates on mortgages.

“With energy companies like British Gas already having raised their bills and others likely to follow, it’s more important than ever to compare prices online to get the best deal.

“Consumers should also take advantage of fixed-rate mortgages while the base rate of interest is still at its historic low, helping them guarantee lower interest for longer and ensuring that they can plan their budgets better to keep on top of debt.”