Since August 2007 the average yearly income of someone on an informal debt management plan has risen by nearly £3,000 from £20,540 to £23,432 while debt levels have decreased by more than £300 from £26,662 to £26,344.
Six month review
Average level of debt: £26,344
Average age of debtor: 44
Yearly gross income: £23,432
Male: 43%
Female: 57% Average number of creditors: 8
Affordable payments as a % of contractual payments: 26%
Monthly living costs: £1,083
Monthly disposable income: £228
No of months to be debt free: 147
Since August 2007 the average yearly income of someone on an informal debt management plan has risen by nearly £3,000 from £20,540 to £23,432 while debt levels have decreased by more than £300 from £26,662 to £26,344.
Other notable changes over the six-month period include an increase in the number of men on debt management programmes, from 42 per cent to 43 per cent, and a rise in the average age of a debtor from 43 to 44 years old.
The number of months for someone on a debt management plan to be debt free has remained above 12 years throughout the six months, fluctuating between 145 and 147 months.
And the amount people can afford to pay creditors as a percentage of their contractual payment has remained constant at just 26 per cent.
Chiltern’s Joanne Gill says: “Our figures show that over the last six months the average yearly income of our clients has risen by over 14 per cent while the average debt has fallen by 1.2 per cent.
“This suggests people who earn more and owe less are being forced into seeking help to manage their finances because of a number of conspiring factors.”
Credit Crunch
The credit crunch has reduced the availability of credit to borrowers with a tarnished credit history which means stretched borrowers have to look for an alternative to consolidation to help them meet their contractual repayments.
Increased household bills
Over the last year household bills, or priority payments, have risen significantly.
• The Council of Mortgage Lenders figures show that mortgage payments as a percentage of income rose from 16.3 per cent in November 2006 to 18.8 per cent in November 2007.
• Combined gas and electricity bills have risen by 16.2 per cent taking the average yearly household bill from £908.49 to £1055.76 (1).
‚Äö√Ѭ¢ The average family’s food shopping bills has risen by 12 per cent or ¬¨¬£750 over the last year (2).
• Council tax is set to rise by an average of 4 per cent to £1,373 for an average Band D property for the 2008/2009 year. (3)
“Nearly half a million people have missed a mortgage payment within the last six months (4) and with the reduced level of available credit for people with imperfect histories, household finances are taking a battering.
“People who are struggling with debt repayments need to be open to different ways of managing their budget, like debt management. It makes sure people have the money they need to pay their mortgage, council tax, utility and food bills.”
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.