Unsecured debt payments swallowing income
The number of people spending more than 50 per cent of their income on unsecured debt payments has tripled in the past year according to credit reference agency Callcredit.It says six per cent of the population now spend more than half their income on repayments, while the proportion of people spending over 30 per cent has doubled over the past year to 14 per cent.
Guidelines from the former DTI (now the Department for Business, Enterprise and Regulatory Reform, BERR) identify the threshold for becoming over indebted as an individual spending over 25 per cent of their gross monthly income on unsecured repayments.
The problem affects women more, said Callcredit. Almost one in ten women (nine per cent) spent more than half their monthly income on unsecured debt repayments, compared to four per cent of men. Men and women aged 35 to 44 years appear to be struggling the most.
Consumers do not appear optimistic about their financial future with 43 per cent of individuals believing that their current situation is going to worsen over the next 12 months, compared to 24 per cent who think it will improve.
Owen Roberts, head of Callcredit Check, the consumer arm of Callcredit, said: "The increasing proportional spend on unsecured debt paints a concerning picture of consumer finances within the UK and this level of debt servicing would appear to be unsustainable. With many people unable to see any light at the end of their financial tunnel, there is a perception that worse is still to come."
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