Average debt ‘93 years to pay back’

patch3228

Many people who are in debt have no realistic hope of paying off their bills in their lifetime, a charity warned.
The average debtor would take 93 years to pay back the money at an affordable rate, a study of Citizens Advice clients showed.
The reality is that they are condemned to a lifetime of poverty overshadowed by an inescapable burden of unpayable debt,' said chief executive David Harker.
The charity found the average debtor asking them for help owed £16,971, two-thirds more than in 2001.
The sum was 18-times higher than its clients' average monthly income, meaning affordable payments – cash left after essential bills had been paid – would last 93 years.
Worryingly, the study took place in July last year, before the financial downturn, Mr Harker said

If you owe say £20K and the interest is for example 30% then the interest you owe is £6K a year (monthly this is about £500)

Average earner £20K will have take home ~£1K a month and essential bills (I included mortgage payments) would be around an approx figure of £900


So what you are left with £100 a month?, which every month would cover less of this snowballing interest (let alone capital)


This is a bit grim reading, but what would you do if faced with this dead-end prospect?

- Declare yourself bankrupt
- Escape the country
- Bank of Mum & Dad
- Second Job just to survive
- Lottery/ Casino time (all or nothing)

Any other suggestions?

BenL

I was reading about this earlier this morning as well on another website. It went onto say about these new debt relief plans where you can get debts of under £15K written off without full blown bankruptcy.

Need to do some research on these plans i think to see what they all about. Doesn't affect me but I am interested in how people could use the get out of "jail free card" for these sub £15K debts.

Thrugelmir

patch3228 wrote: »

If you owe say £20K and the interest is for example 30% then the interest you owe is £6K a year (monthly this is about £500)

Average earner £20K will have take home ~£1K a month and essential bills (I included mortgage payments) would be around an approx figure of £900


So what you are left with £100 a month?, which every month would cover less of this snowballing interest (let alone capital)


This is a bit grim reading, but what would you do if faced with this dead-end prospect?

- Declare yourself bankrupt
- Escape the country
- Bank of Mum & Dad
- Second Job just to survive
- Lottery/ Casino time (all or nothing)

Any other suggestions?

How many people have £20k of debts that charge 30% interest?

As the recession bites more and more people will have to either come to an arrangement with their creditors or declare themselves bankrupt.

Wookster

Thrugelmir wrote: »

How many people have £20k of debts that charge 30% interest?

Not many I imagine.

Its sobering reading though and Rochdale would be well served to see the impact that debt has on people's ability for discretionary spending.

piggeh

patch3228 wrote: »

This is a bit grim reading, but what would you do if faced with this dead-end prospect?

- Declare yourself bankrupt
- Escape the country
- Bank of Mum & Dad
- Second Job just to survive
- Lottery/ Casino time (all or nothing)

Any other suggestions?

Been there, bankruptcy was only realistic way to get life back on track. Bankruptcy is there to give people a fresh start (wonder if it works the same for GB Plc or will we be stigmatised by other nations )

However averages can skew figures and the figures are only from those that asked for help. Most people only ask for help at their lowest ebb. Some of these could have had well paid jobs and debts were easily serviceable. Maybe after asking for help they found other employment etc.

I disagree with an under £15k 'get out of jail free' option. If your debt is under £15k then it's much more likely to be an amount you could pay back. They should however transfer this to a system similar to student loans ie once you earn over a threshold they deduct a certain amount automatically and interest is a nominal amount.

Dan:_4

I think this example is very far fetched to say the least. 30% interest - they having a laugh or what???

Anyways, If it was me then I would transfer the balance to 0% Credit Card deals and use the 6K interest payments + capital repyaments to clear cards within a couple of years.

The artical is a load of !!!!!!!! anyway.

Sprintz

yeah it would be interesting to see what get out of jail schemes there are...

bit cynical (but I am old enough now to be ) but i reckon a killer figure of 93 years debt will not dissuade many of this I-Want-It-Now generation from spending and taking on unaffordable loans/ mortgages

it’s not the first time (definitely not last either) our recession has gone to the dogs and people are like cockroaches they one way or another struggle and survive through any grim prospect would be an interesting poll, but reckon most would go for bankruptcy. Get out of jail schemes are just double-edged swords in that yes they’ll save in the short term, but long term encourages irresponsibility

itsnever2lateisit?

Dan: wrote: »

I think this example is very far fetched to say the least. 30% interest - they having a laugh or what???

Anyways, If it was me then I would transfer the balance to 0% Credit Card deals and use the 6K interest payments + capital repyaments to clear cards within a couple of years.

The artical is a load of !!!!!!!! anyway.

I guess that if you have made use of the services of a debt charity then you chances of getting any credit card are nil, let alone a 0% BT

Dan:_4

itsnever2lateisit? wrote: »

I guess that if you have made use of the services of a debt charity then you chances of getting any credit card are nil, let alone a 0% BT

I wouldn't have gone to a debt charity. If you have been servicing your debt without any problems and making payments on time, chances are you will have a decent credit report and should have little hassle in shifting to 0% BT or even a low LOB would do.

SandC

patch3228 wrote: »

If you owe say £20K and the interest is for example 30% then the interest you owe is £6K a year (monthly this is about £500)

Average earner £20K will have take home ~£1K a month and essential bills (I included mortgage payments) would be around an approx figure of £900


So what you are left with £100 a month?, which every month would cover less of this snowballing interest (let alone capital)


This is a bit grim reading, but what would you do if faced with this dead-end prospect?

- Declare yourself bankrupt
- Escape the country
- Bank of Mum & Dad
- Second Job just to survive
- Lottery/ Casino time (all or nothing)

Any other suggestions?

£20k is more like £1300 ish a month though, not £1k.

ABUSE

Dan: wrote: »

I think this example is very far fetched to say the least. 30% interest - they having a laugh or what???

Anyways, If it was me then I would transfer the balance to 0% Credit Card deals and use the 6K interest payments + capital repyaments to clear cards within a couple of years.

The artical is a load of !!!!!!!! anyway.

I agree with Dan, this is perhaps an extreme example given

but overall the article is quite right on and probably captures a lot of typical families situation.

A bit of 'harmless' borrowing here and there to fund the holiday, oh wait need a bigger car to accomodate new addition to family...funds to look after a child

Before you know it you have borrowed £16,971 and become a stat in this economic joke :rotfl: