A recently released financial report indicated that while amounts owed by households in 2011 declined from the previous year, they face difficulties in repaying these long term and short term loans that could lead to a ‘tide of debt.’
The Consumer Credit Counselling Service reported that unsecured debts, such as those accrued through the use of credit cards and providers of no credit check short term loans, declined on average. However, households with stagnant or unstable incomes due to the current economic landscape led to persistent problems repaying such debts, the CCCS added.
The report, which analysed the problems of 370,000 CCCS clients, said that some of the major reasons leading to debt included rising rents and increasing unemployment levels amongst younger Brits. The debt advice charity’s chairman, Lord Stevenson, remarked that while it was heartening to see that unsecured debt levels are undergoing reductions, debtors have less money available to repay these debts due to stagnating incomes.
42 per cent of those under the age of 25 who went to the CCCS for help last year were unemployed, the report said. Either jobs losses or wage cuts were the chief causes of debt problems for around half of all of the CCCS’s clients among all age groups, the report indicated.
More than half of the 370,000 clients surveyed in the report were living in rented houses or flats, the charity found. A matching figure admitted that after their rent had increased by 30 per cent over the last three years, their ability to pay the rent had declined by a wide margin.