Posted: Thu Sep 27, 2007 11:01 am
Borrowers run up £26,000 debts
The average borrower taking out a debt management plan has run up unsecured debts that would take them 12 years to clear, figures showed today.
Chiltern Debt Management, which helps people set up informal repayment plans, said the average person coming to it for help had run up debts on credit cards, overdrafts and loans of £26,608 with eight different creditors.
But they also earned an average of just £23,535 a year, meaning they owed 113% of their annual income.
The group said debtors could only afford to pay back an average of 26% of their contractual payments to their creditors, meaning that for every £1 they owed in monthly repayments they could only afford to pay 26p.
Chiltern said it would take someone an average of 145 months to be debt-free making their repayments at affordable levels, although it added that many people were able to increase the amount they repaid during the agreement due to a change in circumstances.
Debtors taking out one of the plans had average monthly living costs of £1,083, leaving them with a monthly disposable income of just £231 from which they had to find money for repayments.
The average age of someone entering into one of the plans is 43, with women accounting for 58% of people.
Repayment process
Chiltern sets up informal debt management plans for people having trouble keeping up with their repayments.
It looks at income and expenditure and assesses how much clients can afford to repay each month. It then shares this information with creditors, who often agree to freeze interest on people's debts while they repay them at an affordable rate.
Chiltern charges a one-off fee to set up the agreement, followed by an administration fee of 16% of monthly repayments.
Joanne Gill, head of marketing at Chiltern Debt Management, said: "Creditors are generally seen as the bad guys when a person cannot afford their debts.
"But our experience is that they treat customers with genuine difficulties sympathetically and positively, and recognise that by engaging an informal debt management service the debtor wants to repay their debt."
Source: guardian.co.uk
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The average borrower taking out a debt management plan has run up unsecured debts that would take them 12 years to clear, figures showed today.
Chiltern Debt Management, which helps people set up informal repayment plans, said the average person coming to it for help had run up debts on credit cards, overdrafts and loans of £26,608 with eight different creditors.
But they also earned an average of just £23,535 a year, meaning they owed 113% of their annual income.
The group said debtors could only afford to pay back an average of 26% of their contractual payments to their creditors, meaning that for every £1 they owed in monthly repayments they could only afford to pay 26p.
Chiltern said it would take someone an average of 145 months to be debt-free making their repayments at affordable levels, although it added that many people were able to increase the amount they repaid during the agreement due to a change in circumstances.
Debtors taking out one of the plans had average monthly living costs of £1,083, leaving them with a monthly disposable income of just £231 from which they had to find money for repayments.
The average age of someone entering into one of the plans is 43, with women accounting for 58% of people.
Repayment process
Chiltern sets up informal debt management plans for people having trouble keeping up with their repayments.
It looks at income and expenditure and assesses how much clients can afford to repay each month. It then shares this information with creditors, who often agree to freeze interest on people's debts while they repay them at an affordable rate.
Chiltern charges a one-off fee to set up the agreement, followed by an administration fee of 16% of monthly repayments.
Joanne Gill, head of marketing at Chiltern Debt Management, said: "Creditors are generally seen as the bad guys when a person cannot afford their debts.
"But our experience is that they treat customers with genuine difficulties sympathetically and positively, and recognise that by engaging an informal debt management service the debtor wants to repay their debt."
Source: guardian.co.uk
Please post any news stories about IVAs here:
http://www.iva.co.uk/forum/default.asp?CAT_ID=5
See my Blog:
http://ivanews.blogs.iva.co.uk