Personal Debt Doubles in 2021
As the UK economy begins to recover from the effects of COVID-19, businesses and individuals alike are still struggling. New data released shows that almost 6 in 10 people (59.7%) in the UK are ending 2021 in debt. The average personal debt in the UK now stands at £25,879, a startling increase of 180% compared to 2020. This is more than the levels seen at the start of 2020.
Why is debt increasing?
The pandemic continues to account for a large amount of personal debt. The average individual from the UK attributed £19,203 of their deficit to loss of earnings as a result of COVID-19.
A large portion of this was attributed to day-to-day living expenses, showing the true scale of the cost-of-living crisis in the UK.
Who is in debt?
Against normal trends, the younger generation said their finances have improved over the past 12 months, while those aged 45+ reported worsening finances. This is particularly worrying as this age group have more at risk, with many homeowners and Directors falling into this demographic.
On average, women (£14,911) have half the debt of men (£35,013). People from the UK aged between 35-44 have more debt than any other age group, averaging £53,283 per person.
What does it mean for those in debt?
Across the second half of 2021, we saw a stark rise in the number of personal insolvencies. Q3 2021 brought a 33% increase compared to 2020. The number of IVAs and DROs also rose compared to the same period.
Many people are now facing unmanageable repayments and are finding themselves forced into formal insolvency arrangements. This surge has been expected as the pandemic saw a halt on most insolvency proceedings.
New year, new debt? Not necessarily.
If you are struggling with high levels of debt (£30,000+) there are many ways to resolve your liabilities and protect your personal exposure. Bankruptcy and IVAs are often sold as ‘being the only practical route to go down’ however, there are other informal options available that would ensure you’re being proactive in your approach, getting your retaliation in first. Each situation is different so it is vital to explore every avenue to ensure your strategy fits your case.
If you want to find out what options are available to you, call our team today on 0330 159 5820 or email [email protected] to find out more!