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Average debt hits £17,000 for those who turn to Citizens Advice

27 February 2009 / by Rachel Mason
People turning to the Citizens Advice Bureaux (CAB) for debt help are, on average, nearly £17,000 in the red.

According to new research from the CAB, there is a 'deepening debt crisis' in the UK, and many of those who are asking for debt advice have "no realistic hope of paying off their debts in their lifetime".

The study, A Life in Debt, reveals that CAB clients owe an average of £16,971, which is two thirds more than in 2001 and almost 18 times their total monthly household income, meaning it will take an average of 93 years to pay the money back at an affordable rate.

The CAB says it has seen debt enquiries double in the past 10 years – advisers deal with more than 7,000 new debt problems every day, which means debt is accounting for one in three of all CAB enquires.

A third of those asking for debt advice from the CAB have mortgage or rent arrears or owe money on secured loans while a quarter had council tax arrears and four in 10 are living in fuel poverty.

Of homeowners asking for help, 45 per cent had mortgage arrears – this is up from 30 per cent in 2004.

While the CAB found that the most common reasons why people were finding themselves struggling with debts were low incomes, job losses, illness and disability, the bureaux also found that poor financial planning and big increases in the cost of living also pay a significant part.

"These findings make sobering reading, especially as they are based on data collected just before the worst of the credit crunch began to bite," said Citizens Advice chief executive David Harker.

"Since then we have seen an enormous rise in the number of people turning to us for help because they have lost their job, so we can expect to see many more people struggling with severe debt problems as the recession continues to take its toll."

Mr Harker says it is now more important than ever that lenders are flexible with people who are struggling, "in the current climate it is absolutely vital that lenders and creditors treat people fairly and sympathetically and do everything they can to help ease their debt problems and avoid adding to them," he said.

"Those for whom there seems no light at the end of the tunnel also need solutions that can offer them a fresh start, lift them out of the poverty trap, and give them a chance to build better financial skills for the future."

Are you struggling with debt? Get debt advice from one of our specialist debt advisers who will be able to talk you through the various options available, including debt consolidation, bankruptcy, IVAs and debt management to find the right solution for you.

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