Tackling debt head on

Article Written By: ColtonCollins

A big problem, leading to growing consumer debt is lack of knowledge and awareness, according to debt charity, Credit Action. The Supreme Court recently overturned a ruling concerning overdraft and bank charges. The charges were to be investigated by the Office of Fair Trading, but the new ruling claims that consumers know about the charges so they should deal with the consequences.

The Bank of England recently published figures showing that the British publish reduced its unsecured debt by ?579 million in October, including loans, credit card and overdraft debt. This is the highest debt reduction since the BoE started collecting data in 1993. October was also the first month since 1993 when loan repayments outstripped new borrowing.

Consumer credit lending fell by GBP 0.6 billion or 0.1 per cent, and today household debt will only increase by 20p today, instead of a scary GBP 11.11 on a typical day in January 2008. We are now starting to save, albeit small amounts - GBP 2.98 a day in the past year.

However, increasing numbers of people are seeking assistance to manage huge consumer debts which, according to Credit Action, stood at GBP 1,458 billion at the end of October. PWC figures show that the average household will need to spend 15 per cent of their income on paying off debts and interest and this is in the face of 1, 723 new redundancies every day.

Another scary fact is that every 3.72 minutes, one person is declared bankrupt. This is leading to 1000 people seeking debt advice on a daily basis. So what should you do if your debt is spiralling out of control?

Debt has become entwined with normal life and people dont see it as a problem. But if you want a TV that is ?2000, and you can only afford to pay ?500, then you only actually own a quarter of that TV and most people dont even think about this. We have become dependent on credit. 386 people are declared bankrupt and 128 properties are repossessed on any given day throughout the year. Hard times are as a result of the recession but the recession was caused by too much of a good time without thinking of the consequences.

Dont think that by burying your head in the sand the problem will just go away. It wont, in fact it will get worse, that is the problem with interest rates. Cut up all credit cards and stores cards and sell anything that you dont really need to reduce temptation and reclaim some much needed cash. Remember that every time you buy something on credit and dont pay off the full amount on the statement each month, you are actually paying more than the product is worth.

About the Author

Jacinta Buonassisi has recently been looking into services that provide debt advice and has made an individual voluntary arrangement with Blair Endersby.

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