It is no secret that debt in the UK is a major problem, according to Credit Action the UK personal debt at the end of December 2009 stood at £1,460 billion. As a result of this advice on debt is becoming more available to those who have the confidence to face up to their debt and admit they need debt help advice.

However despite the debt help line available consumers are still shying away from facing up to their debt, afraid to open the red letter bills that fall through the letterbox and even reluctant to tell loved ones and friends, or in most cases are in denial that they have a debt problem at all due to the stigma of debt. Shying away from debt problems can only makes matters worse and can often result in debts being passed on to collection agencies, CCJ’s and charging orders.

A popular way of seeking debt help advice is through a debt management company who are able to offer debt help management and relieve the stress of having to deal with creditors directly. A debt management company will deal directly with the creditors and collection agencies including all telephone calls and correspondence.

Debt Plan Direct offer consumers a tailored debt help management service to suit individual needs and offer free professional advice on debt. Our professional and friendly staff can talk through your debt problems with you and advise you of the best solution to meet your circumstances.

Debt help is out there and readily available it’s just up to you to pick up the phone and call the debt help line. According to credit action 43 % of people in the UK are too scared to take action, don’t let yourself be part of that 43% stand up to debt and face it head on, it is the only way.

Recent research by Unbiased carried out suggests that the average UK consumer will need to work 70 days to cover the interest alone on their debts for 2008.

The numbers of consumers looking for debt help and advice has again increased this year showing that there is trouble ahead for UK consumers due to personal debt levels increasing over the last 10 to 15 years.

The 70 days consumers will need to work to pay off the interest on their personal debt levels is an increase from 44 days last year – showing the increase in the total UK personal debt levels.

The  Chief Executive, David Elm stated: “In the current economic client is has never been more important for people to realise just how much it costs to service their debts and to ensure they have adequate funds available to do so.”

Further research conducted by Credit Action, at the end of January showed that the average UK consumer owed £4,748 in loans, overdrafts and credit card bills.

The UK is currently going through a credit crisis with the UK’s personal debt the highest ever seen.  The stresses of debt are now starting to take their toll on employees at work- known as money sickness syndrome.  Many employers are now taking this issue extremely seriously with HR departments now dealing with personal money matters with employees.

Previously many companies have been slow with this issue but now as the UK debt problems increase employee debt can have effects on company productivity.  A recent new publication, the Thoresen Report shows that employers have a leading role to play in helping individuals and companies should do more to help their employees with any personal debt related issues.

It is arguable as to why an employer should even meddle with the employees’ personal matters but now with the ever increasing personal debt mountain building in the UK it is difficult for employers not to help and is seen as more than just a social issue. 

It has been found that the debt problems affect everyone in all classes and not just those on lower incomes or those of a younger generation.  It is only a matter of time when an employees’ debt problem start spilling into the workplace and starts having an negative impact on performance.

But how can employers help?

It is important for employers to help and educate employees on money matters as well supporting employees in financial matters.

An employer can help thorough an in-house full debt counselling service where it can offer financial management courses or work in partnership with a debt counseling professionals such as Debt Plan Direct who can help employees to ease their worries and reduce the payments. 

Employers should reach out and help their employees.

We all now that personal debt in the UK is a major concern and there now seems to be a trend to find debt solutions to become debt free.  Individuals in the UK are now finally realizing that there are two facts for debt relief: One- it is possible to become and lead a debt free life and secondly there is nothing to be scared or ashamed of to ask for help when required.

Britains are now coming forward asking for support to fight their spending habits and eliminate their debts.

Suggestions for Instant Debt Relief

1. Start to pay of your bills as a top priority and stop any shopping habits.
   Reduce your daily spending amount and only spend money on your basic living expenses.
2. Cut all your existing credit cards and only use your debit cards or that hard earned cash.  This will stop you overspending immediately. Using credit card is one of the major reasons people get into large amounts of debt.
3. Try to do your shopping monthly instead of going every now and then when you need something- this will help reduce fuel expenses as well as saving you time.
4. Keep away from designer clothes and other luxury goods until all your debts are fully paid off and you are earning a good salary.
5. Don’t buy your lunch at work instead be healthy and save money by packing your lunch from home.  This will save you pounds in more ways than one!
6. If having a family or friends get together  ensure you prepare the budget for the party first and not the other way around.  This is a mistake that many people make when making arrangements.  Planning the party and then fixing a budget accordingly is the worst form of management!
7. Try to reduce your utility household bills by switching to a cheaper provider and the same with your telephone, mobile or broadband companies. Another simple way towards debt freedom to help repay those debts!
8. Try to find a second job to fit around your spare time along with your main job.  You can use the second salary for paying off your debts.
9. Save those pennies and the pounds will save themselves.  Forget the lottery as well as other small bets you might gamble with!

A good consolidation loan is always a good choice for some but be cautious and make sure the term, interest rates and the total amount repayable is made clear to you as in some cases you may end up paying more with a consolidation loan than compared with managing your budget and repaying debts through a debt management plan.

A recent survey by the accountants, KPMG foundthat approximately 7 million people with mortgages and unsecured debts will find it difficult to meet repayments on a regualar basis this year.

And in a separate survey by YouGov it was found that approximately 11 million people or 35 percent of UK consumers with existing debts would again find making their debt repaymens difficult throughout 2008. 

There has already been a decline in the number of people turned down for mortgages as conssuemrs find it difficult to get a mortgage.  This has primarily been due to the tightening of lending criteria by many mortgage lenders amidst the credit crunch.  KPMG fears the recent reults in the surveys will only exacerbate the mortgage decline problem further.

Steve Treharne, KPMG partner and personal insolvency practitioner, said: “Those people who have been robbing Peter to pay Paul, transferring balances from card to card, re-mortgaging and taking equity out of their property to pay off spiralling debt are fast running out of options.”

Worryingly YouGov has also discovered that  a fifth of people were resorting to debt  to pay for every day basics such as food and in some cases were using credit cards or loans to make repayments on their mortgage.

The findings comes as the Council for Mortgage Lenders (CML) revealed there were 27,000 repossessions last year, the highest number in eight years.

Mr Treharne added: “The pressure is really building on the indebted and having had their home repossessed is usually the final straw for many, they usually give up the fight and enter into a formal insolvency agreement such as bankruptcy or an Individual Voluntary Arrangement (IVA).”

A new set of standards to help people resolve their debt difficulties through Individual Voluntary Arrangements (IVAs) have now come into play.  This comes after over one year of disputes between the IVA providers and the credit industry.

Debtors looking to enter into an IVA now have the surety that there is an agreed standard for providers to adhere to for advertising, advice, information and documentation, as well as higher levels of transparency.  This will ensure a higher level of protection in line with the FSA’s philosophy of treating customers fairly as IVA providers adhering to the standards will operate openly and fairly to help people take the right path back into solvency.

The set of protocols were agreed at a meeting between the credit industry, which was led by the British Bankers Association and IVA providers.  The meeting was also chaired by the Insolvency Service to ensure a streamlined process was established for consumers looking for help with their debts via an IVA.

BBA Chief Executive Angela Knight said: “People in debt and their creditors need to know that when an IVA is proposed it is the most appropriate solution. The BBA, the Insolvency Service and the participating IVA providers are united in support for this agreement, which should provide customers with the reassurances they need in order to make the right choice for their financial futures.”

The agreement sets out the standards that will apply to creditors and IVA providers in most IVA cases. It was agreed by representatives from the creditor, insolvency, advice and consumer sectors, under the chairmanship of the Insolvency Service.  Further work is underway to provide accessibility to better market information on IVAs through the worldwide web.

According to recent research by KPMG 22% of UK home owners are struggling to meet repayments on their mortgage and other unsecured debts; that is approximately 7 million people struggling with UK debts.  It also shows that people struggling with existing debt use credit cards or loans to pay for basic living expenses such as food, household bills and even their mortgage payments.

The coming year will not get any easier as a further poll done by YouGov shows 35% of people with debts (approximately 11 million people) admit to difficulties in meeting debt repayments.

Steve Treharne a KPMG Partner and Personal Insolvency Practitioner comments:

“Those people who have been robbing Peter to pay Paul, transferring balances from card to card, re-mortgaging and taking equity out of their property to pay off spiralling debt are fast running out of options. The credit crunch is already seeing credit card companies reducing limits and increasing their rejection rates for new customers.”

“People who previously had access to competitive mortgage deals, despite being late with a couple of payments, are going to find it very difficult to find a deal”, said Treharne. “Combine all of this with increasing energy, council tax bills and petrol prices and you can see why we are predicting a record 130,000 personal insolvencies this year. The pressure is really building on the over indebted and having had their home repossessed is usually the final straw for many, they usually give up the fight and enter into a formal insolvency agreement such as bankruptcy or an Individual Voluntary Arrangement.”

During the research people were questioned about the ‘Stigma of Debt’ and how attitudes have changed over the course of the last 10 years.  Half of the people questioned agreed that it had decreased in the last 10 years, 42 per cent thought it had decreased in the last 5 years and nearly a quarter thought it had decreased in the last 12 months.

The research further asked individuals regarding how open they are in discussing debts with their friends and family.  It was found that 48 per cent of 18-24 year (on average have debts £10,000-£19,999) were happy to discuss their level of debt with friends. However those aged over 55 years old (have on average debts £2,500-£4,999) are the least open generation to discuss debt matters amongst friends and family, with only 18 percent admitting their level of debt to friends.

It has been confirmed by Experian that Manchester is Britains most debt ridden city, followed by Glasgow and Nottingham with 28.7% of households suffering from high debt problems. Those citites which are under the least financial stress are firstly the Isles of Scilly followed by Hart, Uttlesford and Richmond Upon Thames.

Experian has compiled the data of Britan’s most financially stressed cities by combining data such as mortgages, store and credit cards, personal loans as well as repayment behaviour and county court judgement levels. 

The top ten British areas in debt are:

 1) Manchester 
 2) Glasgow 
 3) Nottingham 
 4) Knowsley 
 5) Middlesbrough 
 6) Kingston-upon-Hull 
 7) Liverpool 
 8) Southwark 
 9) Tower Hamlets 
 10) Hackney

The report by Experian also shows fears that the household finances are further being hit by increasing bills and taxes as they rise faster than incomes; thus increasing families personal debt levels.

Almost one in ten adults spend more than they earn on a monthly basis so are left to use credit cards and loans as a means to pay for normal monthly living expenses.  There are also figures released by Accountancy firm Grant Thornton which calculates that 28000 people will declare themselves insolvent in the first three months of this year.

By the end of December 2007 the total UK personal debt level was at a dizzy £1,409bn. This equates to an increase of £120bn or 9.3% for the previous 12 months.  The total secured lending on homes increased by 10.0% in the last 12 months to £1,185bn.

Overall total lending in December 2007 grew by £9.1bn and consumer lending grew by £0.6bn.  The secured lending fraction grew by £8.6bn in the month.  The total personal lending increased by 5.7% or £224bn in December 2007 in the last 12 months.

Excluding mortgages the average household debt in the UK is approximately £8,985- this figure increases to £20,895 if the average is based on the number of households who actually have some form of unsecured loan.   Including mortgages the average debt in the UK is approximately £56,588.

Inclusive of the mortgage the average owed by every UK adult is approximately £29,684- this is an increase by approximately £185 last month.

The average outstanding mortgage is approximately £100,451 this is the figure based on the 11.8m households who currently have mortgages.
 
The interest repayment for Britain’s personal debt now stands at a record-breaking £94.6bn- an increase of 15.10% in the last 12 months.  The interest paid by each household on their personal debt has increased by £500 in the last 12 months and is now approximately £3,800 each year.

Total UK personal debt at the end of October 2007 stood at £1.391 billion (bn).  The growth rate increased to 9.7% for the previous 12 months which equates to an increase of £122bn.

Total secured lending on homes at the end of October 2007 stood at £1.169bn. This has increased 10.5% in the last 12 months.

 Total consumer credit lending to individuals in October 2007 was £222bn. This has increased 5.8% in the last 12 months.
Total lending in October 2007 grew by £8.8bn.  Secured lending grew by £7.3bn in the month. Consumer credit lending grew by £1.4bn.

Average household debt in the UK is £8,920 (excluding mortgages). This figure increases to £20,741 if the average is based on the number of households who actually have some form of unsecured loan.

Average household debt in the UK is £55,877 (including mortgages).

Average owed by every UK adult is £29,311 (including mortgages). This grew by £250 last month.

Average outstanding mortgage for the 11.8m households who currently have mortgages is £99,090.

Two fifths of mortgagors have secured debts of over £90,000, up from one fifth in 2004.
Average interest paid by each household on their total debt is approximately £3,744 each year (this equates to ~ 9% of take home pay).

Average consumer borrowing via credit cards, motor and retail finance deals, overdrafts and unsecured personal loans has risen to £4,678 per average UK adult at the end of October 2007.

Britain’s personal debt is increasing by £1 million every 4 minutes.