Twenty three million Brits have unsecured debt
Twenty three million (52% of Britons over eighteen) have unsecured debt, beyond their mortgage, according to research from Vincent Bond & Co, UK personal insolvency experts. Even more shocking is that though 90% of those in debt believe they will be able to pay back their debts themselves, almost one million won’t be able to do so, and will seek a solution either through a debt management plan / Individual Voluntary Arrangement, bankruptcy order a debt relief order, or through other means. In spite of this, almost half (46%) of people are not worried about their debt at all, believing it will ‘all work out in the end’.
The research also looked at those with the highest levels of unsecured debt. Almost one in five Brits (19%) who have over £20,000 of unsecured debt will not be able to pay it back by themselves. Yet, when this group was asked how they will clear their debts:
Just 10% said they have a debt management plan in place or will seek one
4% said they have an individual voluntary agreement in place or will seek one
2% said they have claimed bankruptcy or will seek to do so
The majority (81%), believe they will be able to clear their debts themselves, which is astonishing, given the debt they refer to does not include any other secured debt such as mortgages.
Steve Rees, Managing Director for Vincent Bond & Co said: “Looking at the trends for 2011, this year there have been five times as many personal insolvencies as there were ten years ago. The fact that 90% of people believe they can take care of their debts themselves even though this is clearly not the case, is worrying. I would advise all these people to seek help and deal honestly with their debts.”
Rees continued: “What will it take for Britons to face the truth and deal with their debts? Coming to terms with debt is never an easy thing to do, and the fact so many people have such a high amount of debt is alarming. If you had £20,000 of debt and could afford to pay £200 per month it would still take you almost a decade to be clear of the debt in full. I would recommend those with such high levels of debt seek professional advice and start clearing it now.”
Below is a list of tips to help you get your spending and debts under control:
One of the hardest things about dealing with debt is facing up to it. It can be difficult to admit you have debt problems, but this is the most important step. Write down everything you owe (credit cards, store card loans etc).
Review and list all your monthly incomings and outgoings. Are your outgoings higher than your incomings? Think about how you could cut back on unnecessary spending.
Prioritise your repayments – try to pay more than the minimum payment on each of your credit cards. Focus on the cards with the highest APR and channel any surplus funds into these. Once the card with the highest APR is paid off, channel surplus funds into the next highest APR card and so on. Organising your repayments in this way could reduce your outstanding credit card debts more efficiently.
Make sure you have all your direct debits and standing orders arranged so that your mortgage/rent/utility bills and other unsecured creditor payments are taken a day or two after payday. This way you can rest assured that all priority bills have been immediately settled and you will know exactly how much you have left to last you until the end of the month.
Steve’s final comment – “Make it your goal to end up owing less and start your new year’s resolution now”.