Consumer debt in the UK

Over recent years there has been a great deal of concern with regards to the levels of consumers debt in the UK, which have been rocketing. By the end of March 2007 personal debt levels in the UK had soared to over £1.3 trillion, which reflected a rise of £1.16 billion or 10.5 percent over the previous twelve months.

And despite the fact that debt levels continue to rise, consumers are still flocking to take out loans, credit cards, store cards, and various other forms of unsecured credit – and lenders are willing to provide them with the finance that they need.

People in the UK are racking up unsecured debt like there is no tomorrow, and over recent years making applications for finance has become easier and easier. In the past, those looking to take out a loan had to go cap in hand to the bank manager, which most people didn’t really want to do unless it was really necessary.

Lending criteria was more stringent, and more questions were asked with regards to what the money was for. Telephone applications made the process somewhat easier and more convenient, and with more and more lenders setting up call centres to deal with loan applications, greater numbers of people began to make applications.

However, it was when Internet applications were introduced that consumer debt really took off, with consumers able to sit back and make applications from the comfort and convenient of their own home without having to speak to anyone, justify their application, or put themselves out in any way.

The availability of Internet applications resulted in many people making applications when ordinarily they would have thought twice about whether they actually needed the loan before speaking to a lender. From personal loans and credit cards to catalogues and store cards, consumers in the UK simply can’t get enough finance.

Today, not only is the level of consumer debt a problem in the UK, but also the rising levels of bad debt, which recently broke the £100,000 barrier for the first time. This is where a consumer has accumulated so much debt that they can no longer meet the repayments on their commitments, and have to find a solution, which often comes in the form of repayment plans, Individual Voluntary Arrangements, and in the worst case scenarios, bankruptcy.