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Daily figures reveal rise in people seeking debt rescheduling plans

06 January 2010

Daily figures reveal rise in people seeking debt rescheduling plans

New statistics reveal that 1,000 people seek some form of formal debt rescheduling plan every day in the UK.

According to the latest figures from Credit Action the average household debt in the UK was £9,016 (excluding mortgages) at the end of November, while the nation’s total personal debt stood at £1,459bn. The findings indicate a 0.7% growth rate in personal debt over the last twelve months.

However, with the arrival of a new year, many people are prioritising getting their debt problems under control. Debt Management Plans, IVAs and Trust Deeds are all popular choices for those struggling to cope with repayment demands for personal loans, credit and store cards and other unsecured debts.

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Prior to December, one person was declared insolvent or bankrupt every 3.72 minutes in the UK. However, the extra spending brought on by Christmas and New Year, means that number could rise when new figures are revealed.

Insolvency trade body R3 confirmed last week that one in 10 of us has gone into debt to cover the cost of Christmas, while 6% are still repaying money they borrowed for gifts in 2008. The survey showed that 8% of people admitted to using debt to cover festive costs, while a further 13% were worried that they wouldn’t have enough money left over to cover bills throughout January.

Peter Sargent, president of R3, said: "Christmas can be a treacherous time for people who are struggling already to make ends meet.

"While many people have been careful in their spending throughout the year, worrying numbers are set to break these good habits resulting in a financial nightmare for the New Year."

The R3 group is predicting a record 154,355 people will be declared insolvent during 2010, and it is expecting a high proportion of these people to realise they are unable to keep up with their debts during the first few months of the year.

Mr Sargent said: "Personal insolvencies hit record levels in 2009 and we usually see a rise in the New Year due to festive over-spending."

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Meanwhile, an NHS helpline has been launched by the government for people struggling with stress, amid mounting problems caused by financial worries.

A quarter of people with mental health problems experience debt, but only two-thirds of them are likely to ask for help. Care services minister Phil Hope said: "After the festive season many of us take a long hard look at our finances.

"Tightening our belts and getting out of debt always features high on the list of new year resolutions. But debt can have a serious impact on a person's mental wellbeing, causing stress, depression and even suicidal thoughts."

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