The younger generation continues to run up unprecedented levels of debt at university and beyond, but with average household debt excluding the mortgage at £7,754 for each UK adult, the British love affair with credit clearly spans a range of ages and lifestyles.
Debt seems to be an inevitable part of life for some people and Britons have taken on record levels of debt over recent years.
Thomas Reeh, CEO of national mortgage broker, blackandwhite.co.uk, said: Its a real concern that personal debt is spiraling out of control and that consumers are not exploring ways of relieving their debt burden. Its January in particular where many consumers feel the pinch as their Christmas credit card bills roll in
The latest official figures showed that a record number of people in England and Wales went insolvent in 2006. The government’s Insolvency Service said that, during the last three months (Oct-Dec 2006), 27,644 people went bankrupt or entered into IVAs to manage debts.
Insolvencies were 55 per cent higher than during the same three-month period in 2005 and are now widely expected to top 100,000 for the entire year
It is especially at this time of year that our television screens are packed full of adverts offering loans and tricks of the trade to help Brits save money.
Many will opt for a consolidation loan, taking out one single loan to pay off a number of existing debts.
Debt consolidation often takes the form of a second mortgage and it is estimated that 60 per cent of second mortgages are for this purpose alone.
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Reeh said: Consolidating debts can be a very beneficial way of clearing very expensive personal credit. At blackandwhite.co.uk we are seeing more and more clients who are using the equity in their property to establish a remortgage or a second mortgage to consolidate their debts and enjoy one lower monthly payment. Many of these customers are in a desperate position with an impaired credit history, thankfully we can rescue the situation more often than not
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However, a recent study revealed that just 8 per cent of Brits have plans to consolidate debts in the near future, yet a typical consumer could easily save over £1,200 by consolidating.
So why dont people want to save money this way? Well, according to statistics more than 40 per cent of us think that debt consolidation is a bad deal for the consumer.
This is often due to consumers not knowing exactly what it is they are signing up for, and problems can arise when borrowers are unaware that a loan is secured on a property or what the consequences of default in terms of charges or repossessions are.
But, it doesnt matter how many leaflets we receive or adverts we watch, the decision to consolidate debts lies completely in our own hands.
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