debt help

An analysis by the charity StepChange has revealed that the self-employed had average debts of 18.6 times their annual income, compared to those in part-time or full-time employment who carried average debts of 4.1 times their annual earnings.

It found that mortgages made the biggest impact in debt burdens, closely followed by credit card debt, which was twice as high for self employed people.

Delroy Corinaldi, a spokesman for the charity, said: “The unsecured debt levels of the self-employed indicate that people are taking on significant debts in order to invest in their businesses. However, with lower income levels, servicing these debts is likely to become increasingly problematic and too often the debt burden can become too much to bear.”

Figures from the British Bankers Association have revealed that mortgage repayments almost outstripped new borrowing in 2012, while unsecured debt fell by 1.6%.

The amount held in savings accounts also went up by 6.1% over the year, with inflows to cash Isas being particularly strong.

Howard Archer, chief UK economist at IHS Global Insight said: “Unsecured consumer credit still remains very low compared to long-term norms, and the impression remains that consumer appetite for taking on new borrowing is limited while there is also an ongoing strong desire of many consumers to reduce their debt.

“Consumers’ desire and perceived need to deleverage is clearly the consequence of ongoing serious concerns over the current state of the economy and still heightened worries and uncertainties over the outlook.”