The level of personal debt in the UK has become an increasing concern, especially given the difficult financial and economic climate that so many people are facing at the moment. Increased living costs, a rise in VAT, higher risk of job losses, and government welfare cuts have left many people struggling with their everyday living costs.
The Insolvency Service recently released figures showing that although there was a drop in personal insolvency levels in the final three months of last year the number of insolvencies over the course of the year rocketed to record levels last year. The bad news is that officials believe that the number of insolvencies could rocket even higher over the course of this year.
Figures have shown that a huge number of people are now finding it difficult to make their money stretch to the end of the month when they next get paid, with many running short around two thirds into the month. This means that for one third of the period many people are relying on credit to get them through, and this is resulting in credit card balances, overdrafts, and loan debt spiralling out of control.
It has even been claimed by the Citizen’s Advice Bureau that problems with money have resulted in the increased number of cases of depression and mental illness.
Figures show that there were over 135,000 personal insolvencies last year, and this could increase to in excess of 150,000 this year.
One industry official said: “Unfortunately, it’s only going to get tougher as the government’s austerity measures are only just beginning to be felt in people’s wallets. I doubt that when the coalition government came to power last May, it envisaged that its austerity measures would result in such a startling increase in the cost of living. These spiralling costs, coupled with worldwide commodity shortage and conflicts in the Middle East pushing up oil prices, means that the future doesn’t feel that bright! We have at least begun pay back our debts, some £24 billion in the last 12 months but again this is marred when you consider that banks have written off nearly £10 billion of our debt over the same period.”
