[YouGov is an independent research company commissioned by the UK Government to carry out the survey in association with R3 - the UK trade body for Insolvency professionals. It has confirmed what many in the industry fear - that unsecured debt is an increasing problem in the UK, for an increasing number of people.]
There have been three core causes highlighted as contributory factors in the massive escalation of personal debt, including; ‘Misuse of credit cards’, ‘borrowing without thinking about how to repay the money’ and ‘irresponsible lending by credit providers’
At Sterling Trust, we hear constantly from people who have been forced to subsidise their living costs due to inadequate wages & increasing bills. This is not a new phenomenon, rather it has been ongoing for the last few years, in fact since the introduction of the "National Minimum Wage" many years ago.
The National Minimum Wage has actually been counterproductive in many areas, actually reducing workers' wages to a socially acceptable minimum, and hampering calls for regular increases in line with, or above inflation. Those who chose to abuse the system previously, continue to do so and it is therefore highly questionable how much benefit has been gained since it's introduction.
We have been inundated by enquiries since launching the self-help website and are delighted to think it has been a success in helping people to overcome their financial difficulties. One of the main areas for concern is the way that people are allegedly bullied into making repayments to their credit card, loans and other forms of unsecured debts in preference to their essential living expenses, such as mortgage, rent, council tax and utilities etc.
We are calling on the Government to clamp down on the way creditors and their collection agents represent themselves and the way they conduct telephone conversations. A lot of the letters they send out are also deliberately designed to be misleading and frighten people into making payments, which actually contravene the Administration of Justice Act 1970, for which they can be held accountable in a court of law.
The whole of the debt industry needs clearing up and legislation should be introduced to protect clients more when they get into difficulties. Although most lenders say they want to help, the reality is often quite different. The bank who likes to say "Yes" is apparently now saying, "No. Clear off."
The whole banking system is in total freefall and as a result nobody can predict what will happen going forward. With all the mergers and takeovers currently happening in the UK and more undoubtedly around the corner, massive changes are sure to happen fairly soon. It remains to be seen how this will all unfold over the coming weeks, months and years.
One thing is absolutely certain, you cannot possibly borrow your way out of debt and expecting to do so is madness. Historically, this is what "Responsible Lenders" have been advising us to do, in search of bottom-line profits. "Consolidate your debts with a home-owner loan" - sound familiar? So just how "Responsible" does that actually make them?
If you are having difficulty in repaying your debts or are getting into arrears with your other bills because of them, visit us at http://www.sterlingtrust.org.uk and see if we can offer you a solution. We provide the website and all the forms, letters and instructions you should need to manage your debts totally free of charge.
The website is undergoing continual development (funds allowing!) to try and improve the service and make it easier to use, so if you have any useful suggestions on how we might improve it, please contact us. This is your site so please feel free to make the most of it. We have a Live Chat support feature, plus email and telephone support, so please, get in touch if you have any questions.
YouGov is an independent research company commissioned by the UK Government to carry out the debt crisis survey quoted.
Mike Sterling is a charity debt management specialist, with over 20 years experience dealing with debt problems.
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