Nature of debt revealed

A fall in income often prompts a descent into problem debt, a new survey reveals.

The Debt Counsellors' Annual UK Debt Survey 2006 looked into the circumstances that led to people coming to their advisers.

The study found that almost half (46 per cent) of the people that approached them owed more than £20,000 with one person in eight (13 per cent) owing more than £50,000.

Life events such as redundancy, divorce, separation, illness and bereavement tended to precede over-indebtedness, but two people in five blame themselves, and attribute their problems to bad financial management and overspending.

Britons approaching debt councillors tend to be young, owe money on credit cards, store cards and personal loans, and are trying to get on the property ladder.

In fact, 91 per cent of cases that debt councillors asses involve credit card debt, 84 per cent involve debts through personal loans and 47 per cent have store card arrears. Just 40 per cent of cases involve people with mortgage problems.

"The fact that many of these debt problems have been caused by bad budgeting, overspending and general poor judgement is evidence that too many people are waiting too long to take advantage of professional advice and debt counselling," said John Porter, a senior counsellor with the Debt Counsellors.

"The level of debt is a real concern and shows that people tend to delay seeking advice until their debts are serious and out of their control.

"Fortunately, there is always help at hand and answers for even the most serious debt problems. There are plenty of options even for those who suffer a drop in income through no fault of their own, because of redundancy or divorce and so on. But the sooner people seek help, the better."