Thousands More To Suffer From Problem Loans

Wed, 16 Apr 2008

The number of people struggling to cope with their debts could double during 2008, as a tightening on lending condition is limiting people’s refinancing options, according to a new report published today.

Research by debt management solutions firm TDX Group estimates that around one million UK residents have "problem" unsecured debts worth £25 billion - an average of £25,000 per person.

Around 60 per cent of this money is owed on credit cards, with the rest mainly personal loans, according to the research.

The ‘UK Problem Debt - consumer crisis or efficient market’ report has warned that changing economic conditions, including Britain's slowing residential housing market and an increase in personal inflation, will result in more people facing financial difficulties this year.

Furthermore, the recent credit crunch and stricter lending practices will have a major impact on the solutions available for people looking to see themselves out of trouble and manage their debts .

The report revealed nearly 600,000 Brits have been unable to refinance their debts this year after finding their usual lines of credit cut off, forcing them to go bust or sign expensive "bankruptcy-lite" agreements.

The TDX Group also estimates that the number of people taking out individual voluntary arrangements (IVAs) could double this year. In 2007, around 400,000 people in the UK entered into IVAs and debt management schemes .
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