'Unsustainable' Debt Payments Soar

• News
• Published: 16 Feb 2009 in Money and General

Research has revealed that almost one in 10 people in the UK spend more than half of their income on unsecured debt repayments.

Some 8% now use half of their pay on personal loan, credit card and store card repayments, compared with only 2% in August 2007, according to credit reference agency Callcredit.

It is most common among young people, affecting 12% of 25-34 year olds, up from 6% in August 2007.

People who have to spend more than 25% of their income on unsecured debt repayments are classed as being over-indebted by the Department for Business, Enterprise and Regulatory Reform.

Devoting twice this level of income to debt repayments is likely to be unsustainable, Callcredit has warned.

Nearly 70% of people are more concerned about their financial situation now than they were a year ago,  particularly the over 55s.

Owen Roberts, of Callcredit, said: "The worsening economic climate is having a clear effect on consumer attitudes and behaviour. The increasing proportional spend on unsecured debt paints a concerning picture of consumer finances within the UK and this level of debt servicing would appear to be unsustainable."

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