Nearly 13 million adults now heavily in debt  

Nick Cheek
Written By:
Nick Cheek

There were 12.8 million adults that were found to have a heavy debt burden in January this year, a 66 per cent increase from debt figures for October 2017, according to data from a campaign group.

Analysis from campaigners Debt Justice based on the Financial Conduct Authority’s (FCA) Financial Lives survey, revealed that highly indebted adults has increased by two thirds in a little over five years. It was uncovered that many adults are falling behind on paying bills or finding debts increasingly difficult to handle. The figures highlight the effect of the cost-of-living crisis.

Debt Justice discovered that there was a lack of suitable options to reset finances, which has the capacity to weigh people down in debt for years. As a result many have had to go without essentials.

In addition, the organistion states that many have become more vulnerable to exploitative companies who are selling unsuitable Individual Voluntary Arrangements (IVA). An IVA is an agreement to pay creditors all or part of a debt via regular payments to an insolvency practitioner, who will funnel payments through to creditors. It is anticipated that the build-up of unpayable debt will weigh down households for a considerable amount of rime.

In turn, this will act as a drag on the economy unless the government recognises just how deep the household debt crises is.

Debt spiralled up to £15,000

In one example, a 47-year-old disclosed her situation. The community worker from east London said: “My health started deteriorating and I had to have a major operation. Afterwards I needed time off work to recuperate, so my pay went down even further. My debt started spiralling and eventually it reached £15,000.

“I felt the shame and stigma. I wondered whether people were going to think that I’m careless with my money. I’ve never had money troubles, so I kept it quiet for a long time. I took out credit cards and loans, I tried everything possible to pay off the debt that was building up. After sharing my story and campaigning alongside other people that have been pushed into debt, I now know that I was put in an impossible situation, and it wasn’t my fault. Many people are now being pushed into debt, I want to tell them that they are not alone, and help is out there.”

Heidi Chow, executive director of Debt Justice, said: “The government is turning a blind eye to the colossal household debt crisis that is engulfing millions of people at breakneck speed. Instead of ignoring the problem they need to raise incomes, boost the protections for people in arrears and write off the unpayable debts to give everyone that needs it a fresh start.”