Debt Advice & the Bank of England’s debt figures

30 December 2008

Higher bills, falling house prices, less ‘spare’ money – the last year has seen ‘an abrupt change in the circumstances facing British households’, says the Bank of England’s Quarterly Bulletin for Q4 2008.

Looking ahead, it seems likely that many people will – or perhaps should – start 2009 by looking for some professional debt advice.

Who needs debt advice?

Together, the UK’s citizens owe just under £1.6 trillion. Around three quarters of that is secured debt and the rest is unsecured (debt owed on credit cards, overdrafts, personal loans, hire purchase deals, etc.). But that debt isn’t evenly split – some groups are much more likely to need debt advice than others.

For example, people with mortgages make up just 40% of households – but this group accounts for about 60% of the total unsecured debt reported in the Bulletin.

And different groups are having different degrees of difficulty keeping up with their bills and debt payments:

71% of homeowners with no mortgage say they’re keeping up with their bills without much difficulty – but only 46% of tenants say this.
For people with mortgages, the size of mortgage makes a big difference. Just 2% of people with low LTV* mortgages said they’d fallen behind on some or many bills – compared with 4% of people with high LTV mortgages (and when it comes to tenants, a full 8% had fallen behind on some or many bills).

How are we tackling our debts?

Asked about ways of resolving their debt problems, a full 54% of respondents planned to cut back on spending so they could afford to keep up with their bills and debt repayments.

This is just one area where the right debt advice can make a big difference: a professional debt adviser can help people budget effectively, so they can make an informed decision about where to cut back.

Is debt advice enough?

In many cases, the right debt advice can help borrowers resolve their debt problems and regain control of their finances. Sometimes, though, debt advice isn’t enough on its own. People with more serious debt problems may need to find out more about the different debt solutions available – and get some debt advice about which one may be right for them.