Consumers not thinking through consequences of debt

Consumers may be worried about managing their debts, but many have given little thought to how they’ll repay what they owe.

A survey by PricewaterhouseCoopers shows that 27% of people are worried about their ability to repay debts in the future.

16% are already struggling to repay their current debts – but very few are actually ‘considering options to restructure their debt’. And 14% of people already worried about their future debt repayments are expecting to use more credit in the run-up to Christmas.

“The survey,” said Richard Thompson, partner at PricewaterhouseCoopers, “shows that some people are still prepared to borrow despite the tough market conditions, rising unemployment, a depleted housing market and the increasing sense that they will be unable to repay debt in the future.”

According to the Bank of England’s Inflation Report November 2008, ‘Household borrowing has increased markedly over this decade. The ratio of household debt to annual income reached 170% in 2008 Q2, compared with only around 105% in 1990–91. Yet in aggregate the proportion of household income devoted to servicing that debt in Q2 was not greatly different from that in the early 1990s. That reflects the significantly lower level of official interest rates in the more recent period.’

“Now is clearly the time to tackle debts, not accumulate more,” said a spokesperson for debt management company Gregory Pennington. “We would advise anyone with debts to seek expert debt advice as soon as it looks like they’re running into problems. The right debt solution – a debt management plan, for example – could help them reduce their monthly payments and provide them with a clear path out of debt.”

---

Gregory Pennington offer debt management plans as well as a range of other debt solutions. If you are worried about debt, contact one of our expert debt advisers now.