On the whole, most people are affected by debt at some point in their lives. Some may suffer from debt problems to a much more severe degree than others. And for those in a debt crisis, debt is so much more than a finance issue as it affects every area of their life.
There are lots of reasons people struggle to manage their debt. Amongst typical outgoings such as mortgage repayments, rent and utilities, mounting debts can come from various other sources, such as credit card debt and high interest payday loans. Falling into a debt crisis is usually due to not confronting the situation the moment it stops being a manageable amount. Typically, the longer problem is ignored, the more severe it becomes.
However, research suggests that there’s a significant disparity between homeowners with severe debt problems and non-homeowners.
Home back-up
A spokesperson from Bankruptcy.org.uk reported: “According to our latest findings, although surprising, people who are on the property ladder are less likely to get into serious financial difficulties. This is due to the fact that it tends to be the people in the lowest tax bracket who spend more than they actually earn, and the people naturally find it difficult to get on the property ladder.”
A possible reason for this is that people are afraid to talk about their debt problems and in some cases, too afraid to admit that their debt has become too big a problem for them to tackle alone. This is especially the case in situations where outgoings are significantly more than the amount of money coming in.
Given the state of the current job market and an average drop in wages of 4.4% it can’t come as much of a surprise that many get into the habit of borrowing money to maintain their lifestyle, and end up spending more than they earn.
Impact of joblessness
Research at the beginning of the year suggested that the UK job market was showing signs of improvement. Employment had risen by 154,000 from September 2012 with almost 30 million people in work by the end of last year. However, youth unemployment had increased to 974,000 (an increase of 11,000).
The government is currently advertising the Money Advice Service to encourage people to seek help with large and mounting debts and for those who are finding themselves in a serious debt crisis.
Non-profit, professional debt counsellors are available to help people manage their debts and start finding a way to pay off creditors, without making money from people who are already in a vulnerable financial position.
