The impact of a tightening credit market and interest rate rises is creating a greater interest in debt management programmes but too many consumers are still struggling with their debts…
Average level of debt: £26,537 Average age of debtor: 43 Yearly gross income: £23,416 Male: 42% Female: 58% Average number of creditors: 8 Affordable payments as a % of contractual payments: 26% Monthly living costs: £1,078 Monthly disposable income: £229 No of months to be debt free: 146
Over the last month the time it will take the average person on an informal debt management plan to repay their debts has risen by one month to 12 years and two months, and monthly living expenses have fallen by £5.
The yearly salary has dropped by £119, the total debt has gone down by £71 and the amount they can afford to repay each month has fallen by £2 a month.
However, the percentage of contractual payments that are affordable by the debtor and the amount they owe as a percentage of their yearly salary have remained static at 26 per cent and 113 per cent respectively.
Chiltern’s Joanne Gill says: “The impact of a tightening credit market and interest rate rises is creating a greater interest in debt management programmes but too many consumers are still struggling with their debts and not fully aware of the options open to them when they can no longer afford to pay their unsecured creditors.
“By entering into a debt management programme the vast majority of interest and charges added to the debt each month, when people miss their payments, is stopped and a line is drawn under it so they can start repaying what they owe at an affordable level.
“It also provides debtors with the peace of mind that they can afford to keep up their mortgage payments and household bills as these debts take priority over their unsecured debt repayments.”
Living costs in October were equal to those in September at 82 per cent of income, which means a client can only afford to pay 18 per cent of their take home pay to creditors. Contractual payments to creditors as a percentage of income were 67 per cent.
An informal debt management programme offers a flexible agreement between the creditor and debtor which ensures the creditors get a fair proportion of their debt repaid while the debtor is able to pay their priority bills and for food.
Chiltern makes payments to more than 1300 creditors each month on behalf of its clients and has a broad spectrum of customers ranging from a vicar to a tattooist.
The Chiltern Debt Monitor is a regular analysis of Chiltern Debt Management’s database of live customers to determine the profile of debt and debtors in the UK.
