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Government Legislation

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About Your Debt

About You

At the end of April 2011, personal debt in the UK amounted to £1,452 billion – the current sum total of personal debt is almost equal to the country’s entire GDP for 2010.

The average household debt stands at £55,854 (or £8,121 if mortgages are excluded) – a property is repossessed every 14 minutes in the UK and landlord possession orders are made 265 times a day. £179 million is paid in interest every 24 hours, and an individual is declared bankrupt or insolvent every 4.36 minutes.

The total amount of lending in April 2011 increased by £1.2 billion (there was a £700 million increase in secured lending and a £500 million increase in consumer credit lending). At the end of April, total secured lending had reached £1,241 billion and total consumer credit stood at £211 billion.

In the past year, £9.5 billion of loans were written off by UK banks and building societies, which is equivalent to £20.71 million every day, and the Citizens Advice Bureau deals with nearly 10,000 people struggling with debt problems daily.

Redundancy is fuelling increasing levels of debt, with 1,384 people made redundant every day and 850,000 unemployed for 12 months or more.

Download the full statistics.

Statistics suggest that there has been a 77 per cent increase in the number of people filing for bankruptcy in Sunderland.

According to accounting company KPMG, there were 172 debtor bankruptcies recorded in the first three months of this year, up from 97 logged between October and December of 2007.

Wearside also saw the highest jump of any area in the north-east, while Newcastle had the second highest figures, with a 31 per cent increase recorded.

Paul Bateman, KPMG’s head of personal insolvency in the north of England, said: "Consumers are seeing the cost of their mortgages increase, fuel costs continue to go up and now food prices are rising in a manner not seen for years."

He added that for those struggling with debt, seeking professional advice should be the first port of call, the Sunderland Echo reports.

Elsewhere, the Financial Times has noted that recent statistics have suggested that a growing number of people are turning to individual voluntary arrangements (IVAs) via online portals.

Bankruptcy rates in the north-east hit the highest levels in the UK in the first part of this year, according to figures released by the marketing analyst firm KPMG.

The number of people being declared bankrupt in the region grew by 34 per cent between January and March this year.

Nationally, bankruptcy rates rose by 11 per cent over this period in comparison to the previous quarter, with individuals petitioning for their bankruptcy rather than being forced into it by creditors rising from 544 cases in the last quarter of 2007 to 731 cases in the first quarter of 2008.

Paul Bateman, KPMG’s head of personal insolvency in the north of England, said: "Consumers are seeing the cost of their mortgages increase, fuel costs continue to go up and now food prices are rising in a manner not seen for years."

David Kuo, head of personal finance for the Motley Fool, has urged consumers to take into account their current fiscal situation and to re-evaluate their lifestyle choices in what is a financially testing period for everyone in the UK.

The former owners of a hotel in the north-east of England had almost £1.2 million in debts outstanding when they were finally declared bankrupt, according to reports.

Despite only running Skinburness Hotel in Silloth for a year, Adrian Moore and his wife Vanessa Taron Moore managed to accumulate almost £40,000 in credit card debt, £350,000 in mortgage arrears and £77,000 to other creditors.

The details of the couple’s finances were revealed during their bankruptcy court case the hotel, which was first established in the 19th century, was repossessed by the Abbey National Bank, reports the Cumberland News.

"Running the hotel was to be our dream project but it turned into a nightmare for us," said Mrs Moore.

Financial problems relating to the property were contributed to considerably by the loss of tourism trade during winter months and the costs of renovations that had to be made under the terms of fire safety regulations.

A report from the accountancy firm KPMG in December of last year predicted that this year would see a record number of people around the country enter insolvency such as bankruptcy.

Bankruptcies in Wales have doubled in the past six years, as well as an increase in debt counselling queries, reports the BBC.

Those facing problems with debt in Wales can seek help from the Welsh Centre for Credit Counselling, a service which dealt with 6,000 inquiries in 2007.

Dr Brian Gibbons, Wales’ social justice minister, explained to the BBC what action was being taken by the government and the importance of seeking debt help from a legitimate source.

"We are taking action with the UK government on rogue lenders and people who are operating outside the system, loan sharks and so forth," said Dr Gibbons.

Citizens Advice has reported a 30 per cent increase in the numbers seeking information on bankruptcy.

Figures released by uSwitch.com shows that 4.8 million UK adults spend more than they earn, resulting in debt and a 33 per cent increase in bankruptcies from 1992, highlighting the importance of seeking debt advice and assistance.

Record numbers of Scots were declared bankrupt last year as the effects of the global credit crunch hit, it has been reported.

Accountancy firm PKF analysed figures and revealed that nearly 14,000 people in Scotland became bankrupt – four times the number becoming insolvent ten years ago.

Bryan Jackson, corporate recovery partner at PKF, said the full effects of the credit crunch will not be understood for some time as those who became bankrupt in 2007 are likely to be people who began having trouble in 2005-06.

"What these figures show is that indebtedness in Scotland is continuing to increase at a historically high rate," he warned.

According to financial advice charity Credit Action, across the UK, 305 people will be declared insolvent or bankrupt today.

It warns that Britain’s personal debt levels increase by £1 million every four minutes, meaning a further £335 million will be borrowed by consumers in one day alone.

People’s finances are becoming increasingly stretched and Christmas could cause problems unless shoppers plan carefully, a national charity has commented.

Citizens Advice has warned that each January its bureaux see a "surge" in the number of people seeking debt help and information on bankruptcy.

Teresa Perchard, director of policy for Citizens Advice, acknowledged it can be easy to overspend at Christmas by making "spur of the moment" purchases.

However, she warned: "Every year, we see a huge increase in debt problems immediately afterwards. With a little forward planning, Christmas panic buying can be avoided."

Earlier this year, Citizens Advice reported that 2006-07 saw an increase of 20 per cent in the number of people seeking help with problem debt.

It claimed some creditors were guilty of acting irresponsibly by lending to people who cannot afford their repayments.

Ms Perchard said last month that personal debt is one of the biggest issues the British economy faces.

Some older people are being forced back into the workplace as they have discovered their retirement income is far smaller than they had anticipated, an expert has said.

Age Concern spokesperson Helen Spinney said many people reach retirement and are "shocked" by how low their income is.

"There are certainly people who have returned to work because they’ve retired to find that their retirement income isn’t anywhere near as much as they thought it would be," she said.

Earlier this year accountancy firm Wilkins Kennedy released research which showed the proportion of retired bankrupts had more than doubled in five years.

Keith Stevens, an insolvency partner at the firm, said many pensioners were going bankrupt as their pension was not enough to repay their debts and purchase necessities.

He said the older generation felt there was a stigma attached to bankruptcy and did not request help until it was too late.

An expert has warned Britons not to rely upon their homes to fund their retirement.

Research by the Alliance Trust has revealed 43 per cent of adults believe property will be their top income provider in their retirement.

Hyman Wolanski, head of pensions with the organisation, acknowledged there had been "tremendous growth" in house prices over the last ten years.

Mr Wolanksi warned "as we see initial signs of the residential property market cooling down, it is important that people don’t rely solely on their home to fund their retirement".

Last month a survey by accountancy firm Wilkins Kennedy revealed the percentage of retired bankrupts had more than doubled and accounted for seven per cent of all bankruptcies this year.

The firm reported that many pensioners could not meet their debt repayments once retirement caused their income to drop. It claimed the trend would continue as increased life expectancies put an extra strain on savings.

Easy access to credit is to blame for the increasing numbers of old people facing debt they cannot afford to repay, an expert has claimed.

A spokesperson for Saga, a group which provides services to those aged 50 and above, said society’s attitude towards debt has changed and people are happy to have high levels of debt.

"Obviously there are people facing financial hardship and part of that is due to the easy access to credit, which can encourage people to get into levels of debt they cannot manage," he commented.

However, the spokesperson said recent research by firm Wilkins Kennedy which suggested the number of pensioners going bankrupt had doubled in five years was misleading.

It was likely to have been an increase from an "exceptionally low base" he said, adding that 80 per cent of the nation’s wealth belongs to the over-50s.

The research by Wilkins Kennedy had concluded an increased life expectancy and increases in the cost of living had put a greater strain on pensioners’ savings.

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