Every four minutes personal debt in Britain increases by £1million

Debt in Britain has soared to new levels according to financial experts. Much of this they believe is due to huge mortgages people are having to undertake. Research indicates that the average size of a new home loan now stands at £142,000.

Money education charity Credit Action has been examining data from the Bank of England, and it shows Brits have a total personal debt of £1,278billion.

Since mortgages-secured loans- make up around  £1,000billion of this figure, Credit Action are concerned that people are being encouraged to take out loans which they may well not be able to afford.

Even with the mortgage figure out of this equation, the charity estimates each adult in Britain to have £4,511 in debts. Included in this figure is all kinds of unsecured lending like credit cards, personal loans, overdrafts, car financing etc.

Looking at households, as a whole, the figure shows the average UK household debt to be £52,811 (including mortgages) and £8,765 (excluding mortgages).

This week it has been revealed that the office of Fair Trading will crack down on 17 debt management firms who they fear may be misleading consumers, giving them four weeks to amend the situation  or face losing their licence.

Their main concern is the way they are advertising Individual Voluntary Arrangements (which is a type of insolvency nick-named ‘bankruptcy-lite’).

According to the Insolvency Service, IVAs rose to 12,228 between July and September. This is an increase of almost 120%.

The adverts which appeared on websites and in newspapers, failed to state that firms involved charge an admin fee and they also contained false claims that “up to 90% of your debt may be written off.”