Concerns rising about coping with debt mountain

Increasing numbers of people who owe money to banks and finance companies are concerned about their ability to manage their debts, new research from MoneyExpert.com reveals.

The independent financial comparison website says 38 per cent of people with debts - around 13.1 million people - say they are concerned about whether they will be able to repay the money they owe, a figure that has risen by five percentage points from 33 per cent in the previous quarter.

And with the cost of living rising dramatically MoneyExpert.com says even more people with debts have opted to increase the amount of money they have borrowed in the past three months.

In the quarter to February around one in four debtors (27%) said they had chosen to increase their personal debt in that period. However in the last three months some 32 per cent of people with debts - around 11.06 million people - claim to have piled yet more credit onto their personal debt mountains.

MoneyExpert.com believes the rising cost of living - surging food and energy bills prompted the biggest one-month jump in Britain's inflation rate for almost six years this May - is beginning to take its toll on consumers who have debts to repay. And as house prices continuing to fall, the website says consumers can no longer rely on increasing the equity in their home to cover outstanding personal debts.

Sean Gardner, Director of MoneyExpert.com, said: "There are many economic and political measures of a downturn, but there is nothing quite as real as people in debt saying they can't repay the money they owe.

"With close to forty per cent of those who owe money worried about their ability to stay on top of their debts, these latest figures add up to a collective cry for help as Britain's enormous debt mountain looms larger than ever."

The MoneyExpert.com Debt Index measures how well people with personal debt - including mortgages, loans and credit cards - are coping with their borrowing and monitors whether levels of indebtedness are rising or falling.

The latest figures show 38 per cent of adults with debts are concerned or very concerned about their ability to keep on top of their borrowing. Around eight per cent - or 2.7 million people - are very concerned about their ability to manage their debts.

And the number of people who are either unconcerned or very unconcerned about being in debt has also fallen - around 36 per cent are not worried about their ability to cope despite being in debt, whereas some 41 per cent claimed they could cope in the previous quarter.

According to MoneyExpert.com around 32 per cent of people with debts have increased the amount they have borrowed over the past three months, while only 24 per cent have successfully cut the amounts they owe.

Sean Gardner added: "Anyone with genuine concerns about paying the bills needs to take action to avoid finding themselves in even more difficulty. Many people are not in severe trouble but are becoming increasingly worried nonetheless. There are many ways to get your finances under control, from debt consolidation to just juggling your borrowing onto cheaper products.

"But the important thing is to work out a repayment plan and not bury your head in the sand."