Derek Oakley, insolvency director at Debt Free Direct, said that while a number of people get into debt due to situations such as relationship breakdowns or being made redundant, certain consumers find themselves with debt problems due to a failure to assess what impact their continued use of personal loans or other forms of borrowing may have.



Mr Oakley said that "many" people get into debt problems due to poor decision making, "or not being accurately able to assess the impact" of the choices they take. He offered that some people also struggle to understand whether they are able to afford things. Mr Oakley also suggested that financial education at an early age, something that all political parties seem to be backing, would help. "It's something the government's looking at and is something a lot of the debt charities are looking at as well."

The insolvency director suggested that debt consolidation loans are not always the answer to the debt problems of some people either, suggesting that for certain British consumers such loans are the same as "shuffling the deckchairs on the Titanic". "If you have too much debt then borrowing more is not really likely to be the answer; it's simply moving things around," Mr Oakley said.

He also highlighted the role of the lender in the modern credit market, suggesting that there is a certain responsibility bestowed on such organisations when it comes to lending money to consumers. Mr Oakley said that if a high street lender agrees to lend money to a customer, it is often assumed by that customer that "they're capable of paying it back", as that is what seems to be implied by the bank accepting the loan application.

Interestingly, despite a rise in online gambling platforms, Mr Oakley said that a "relatively small proportion" of people single out gambling as the cause of their debt. However, he added that some people that seek advice from Debt Free Direct do not put forward gambling as the "headline reason" for their debt problems, despite this being the cause in some cases.

Earlier this year, the marketing director of Picture Financial offered that a debt consolidation loan could be a wise choice for certain consumers. Julia Dallimore suggested that such a loan, which brings all outgoings together in one place, resulting in one monthly payment, "is a priority" due to the difficulties of managing multiple payments. "For people in this situation, freeing up a significant amount of money each month and getting everything in one place is a priority," Ms Dallimore said.

In addition, Credit Action urged in April this year that people taking on Individual Voluntary Arrangements (IVAs) at an early age could affect their credit rating for six years, suggesting a debt consolidation loan could be a better approach.