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By the end of 2015, the total unsecured debt (excluding mortgages) for UK households hit £353 billion, with a rise of £48 billion from 2012. The report highlights two areas of debt which are becoming very difficult for households to deal with.
The first is ‘problem debt’ where households are paying out a quarter of their income on unsecured debt repayments, this is an issue for 3.2m households currently. The second is ‘extreme problem debt’ where 40% of household income is being used for debt repayments, a problem for 1.6 million UK households.
Frances O’Grady, General Secretary of TUC, one of the report’s authors, commented on the report saying; “Families can’t continue relying on credit cards and loans to get by, but with the average wage still worth £40 less than before the 2008 crash, lots of families have little choice.”
While head of policy at StepChange Debt Charity, Peter Tutton, said; “Every week we see thousands of households struggling to keep up with their essential bills and credit repayments. Sluggish wage growth and the rise in insecure jobs have left households even more financially vulnerable.”
It has been suggested that the Government must include higher wages in their economic plan as well as doing more to help families struggling with debt problems to get access to debt restructuring and insolvency support.