When you are struggling with debt, it can be extremely hard to realise that you aren’t alone.
When giving our expert advice on debt in Scotland, we’ve experienced people who believe that they are on their own in being in debt, which is understandably quite worrying for them.
Although many do seek help, debt is still a huge issue throughout the UK. A new report by the Trade Union Centre (TUC) has highlighted that the number of households who are struggling with paying their debts has risen by a quarter in the past 3 years.
Between 2012 and 2014, 3.2 million families have been reported to be spending 25% of their gross monthly pay on repaying their unsecured debts; a figure that was 2.5 million in 2012 according to other research conducted by the TUC and the Unison union.
Young People and Low Income
With more and more young people becoming independent, it’s little wonder that this demographic is one of the hardest hit by debt, along with low income families and self employed individuals.
Prices are constantly rising and with wages remaining consistently low for many people, more people are turning to the banks and loan companies to borrow money to get by, causing more people to fall deeper into debt by borrowing money that they simply cannot afford to pay back.
The report also brings forward some shocking statistics:
- Around 1.6 million households were spending over 40% of their income on repaying non-housing debts
- Of these 1.6 million, 1.1 million people were earning less than £30,000 gross income a year.
- In 2012, 6% of self-employed individuals who had repayment commitments were in serious debt; in 2014, this had risen to 17%.
- Over the same period of time, the amount of low-income families who were paying over a quarter of their income into their debt repayments rose from 9 to 16%.
These statistics are extremely worrying for a lot of people, including us. Young people (18-34) have seemed to have been the worst hit; rising from 2% of individuals repaying their debts with over a quarter of their gross income, to an incredible 10% in 3 years.
The report has said that student loans haven’t played a part in this figure, but they had seen a dramatic increase in the amount of borrowing using credit cards, overdrafts, personal and payday loans within this demographic especially.
How Can We Recover?
The TUC has reported that, given that interest rates have been predicted to rise in the next few months, the amount of people that are already still in debt is worrying.
Frances O’Grady, the TUC’s general secretary has stated that “Rising household debt is not the sign of a healthy economy. People raiding their piggy banks and borrowing more than they can afford is what helped drive the last financial crash,”
“We need a wages-led recovery that works for everyone, not another debt-fuelled bubble.”.
While this research is a worrying reminder that debt is still a very real problem, there are avenues people who are suffering with debt can take. The first step is to seek professional debt help and work out a sensible system where you can afford to repay your debts.
Don’t hesitate to contact the experts here at Debt Advisory Services (Scotland) Limited if you are struggling with debt repayment. Call us today on 0800 011 2322 and we will be happy to share our expertise in debt management with you to make your life just a little bit easier.