It seems that Britain is addicted to debt and faces a terrible legacy as the recession begins to bite, Liberal Democrat Leader Nick Clegg warns, as new analysis from the Liberal Democrats shows that total personal debt has risen by £1 trillion since Labour came to power. This figure equates to an additional £10m for every hour Labour has been in government. Britons now owe £1.4 trillion in total, with debt repayments of nearly £95bn each year, equating to £3000 per second. Nick Clegg goes on to say, "The fact that Britain's economic growth has been built on a mountain of personal debt means that we are now especially vulnerable to the global economic downturn."
The above statements have been repeated verbatim from the Liberal Democrats website. But the bone of contention is not whether the Labour is responsible, but the fact that British citizens are willy-nilly being suckered into the debt trap.
The alarming rate at which we in the UK are accumulating debt goes to show total disregard of prudence in favour of popularity. Whether it is the Conservatives, Liberals or Labour, the pursuit of popularity and votes, bank politics has led to mounting debts in the UK. This has a cascading effect on personal debt as well. The situation is likely to get worse making the present situation look almost innocuous.
Consider the following figures: - The total secured lending on homes in the UK, at the end of June 2008, stood at £1,212 billion. This has increased 7.5% in the last 12 months.
- The total lending, in the UK, in June 2008 grew by £4.0 billion. Secured lending grew by £3.1 billion in the month and Consumer credit lending grew by £0.9 billion.
- The average household debt in the UK is £9,309 (excluding mortgages). This figure increases to £21,650 if the average is based on the number of households who actually have some form of unsecured loan.
- The average household debt in the UK is £58,000 (including mortgages).
- The average owed by every UK adult is £30,424 (including mortgages).
- 424 mortgage possession claims will be issued and 302 mortgage possession orders will be made today
If the above figures do not ring alarm bells in your mind, you are bound to regret not taking steps to liquidate your debt in the near future. It is not I who is sounding the alarm but noted economists and finance barons. The faster we get rid of debt the better. As the unemployment rates rise and panic sets in the financial markets, the tools which are available at present will disappear making repayment all the more difficult for many.
The government in the UK is meanwhile reacting on predictable lines. From the measures taken till now, it is obvious that they are intent on bailing out the Banks and taking short term action rather than finding long term solutions to the problems. The fat bonuses which directors of sick banks have inked for themselves may have elicited horrific uproar from the public, but with limited response by government officials in the UK.
The way out is to clear our personal debt before it is too late. You deserve debt freedom, it is good for you, good for society and good for the World.
The National Consumer Council reports that 6 million families in the UK are already struggling with debt. The UK level of debt recently crossed the £1 trillion threshold, of which approximately 80% is due to credit cards, loans and mortgages. In the past 6 years, the number of people seeking debt advice has risen by 44%, and is expected to rise even further.
People find it difficult to make debt repayments for a number of reasons. Most often, the main cause of non-payment is usually down to some form of change in personal circumstances such as unemployment, divorce, illness or a new arrival in the family. In these circumstances, many people look towards borrowing more in order to pay off creditors or household bills. Unfortunately, taking on more debt to pay off existing commitments is often a recipe for disaster.
However, debt can have an effect on more than just a person’s financial affairs. In fact, debt is a major contributor towards stress, depression, anxiety, mental health problems, relationship breakdown and even suicide in some severe instances. A lack of financial awareness is often cited as a reason for people falling into debt. Although debt is a nationwide problem, and affects people of all ages and backgrounds, the financial cost of debt is not limited to an individual and in fact can impact greatly on society.
Many people believe the Government should do more to highlight the issue of financial awareness, targeting the loan companies and credit card issuers whose advertisements run constantly on televisions across the country. In many cases, consumers become seduced by the promise of lower payments and relief from their debt burden without realising that they could well end up spending more money in the long term as many loans advertised can have repayments run for periods up to 25 years.
If you pay creditors on time, regardless of what it takes to pay them, you are classed as a good payer and therefore, not a risk when it comes to additional borrowing. In fact, your finances might be in chaos and you could be using money from one credit card to pay debts on another credit card, but many lenders will still provide further finance. As a result, outstanding debts are merely maintained, with payments primarily being made towards interest with little or no monies going towards the actual balance of the debt.
Many debtors find themselves in the hands of specialist debt collection agencies. There are many such companies in the UK, such as Capquest Debt Recovery who buy delinquent debts from creditors and then pursue the debtor themselves for the balance owed. However, for many people, arranging an IVA (Individual Voluntary Arrangement) is a viable solution, allowing a lower payment to be made to creditors over a period of time. There are several companies who can provide advice on this course of action.
If people find themselves in financial difficulty, there is a wealth of free financial advice available to help. The Citizens Advice Bureau can help to negotiate repayment plans with creditors and debt collection agencies, so that monthly payments are reduced and become manageable. By seeking out such advice, tackling the problem of debt needn’t be as daunting as it might appear and could in fact have a positive effect on both the financial and social aspects of being in debt and lead to financial problems being a thing of the past.
Both Chris Ball & Martin Mcallister are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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