Posted: Wed Oct 31, 2007 10:15 am
Debt plan borrowers 'owe £26,500'
The average person taking out an informal debt management plan during October owed £26,500 to eight creditors, figures showed.
But people struggling to keep up with their borrowings had an average annual income of just £23,416, 82% of which was needed to meet essential living costs, according to Chiltern Debt Management.
The group found that people could afford to pay only 26% of the minimum monthly repayments they were liable for, with the full repayments they owed equaling about 67% of their monthly income.
It added that if these debt repayments were restructured to affordable levels, it would take the average person coming to it for help 12 years and two months to be debt free.
Women are more likely to take out one of the plans than men, accounting for 58% of the debt management plans arranged by the group during the month.
Chiltern spokeswoman Joanne Gill said: "The impact of a tightening credit market and interest rate rises is creating a greater interest in debt management programmes but too many consumers are still struggling with their debts and are not fully aware of the options open to them when they can no longer afford to pay their unsecured creditors."
Under the informal debt management plans, people agree to repay a set amount each month based on the money they have left over after meeting essential living costs, while lenders suspend the majority of interest and other charges.
People are charged a one-off sum equal to the first monthly repayment to set up the plan, with a 16% management fee deducted from subsequent monthly payments.
Source: channel4.com
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The average person taking out an informal debt management plan during October owed £26,500 to eight creditors, figures showed.
But people struggling to keep up with their borrowings had an average annual income of just £23,416, 82% of which was needed to meet essential living costs, according to Chiltern Debt Management.
The group found that people could afford to pay only 26% of the minimum monthly repayments they were liable for, with the full repayments they owed equaling about 67% of their monthly income.
It added that if these debt repayments were restructured to affordable levels, it would take the average person coming to it for help 12 years and two months to be debt free.
Women are more likely to take out one of the plans than men, accounting for 58% of the debt management plans arranged by the group during the month.
Chiltern spokeswoman Joanne Gill said: "The impact of a tightening credit market and interest rate rises is creating a greater interest in debt management programmes but too many consumers are still struggling with their debts and are not fully aware of the options open to them when they can no longer afford to pay their unsecured creditors."
Under the informal debt management plans, people agree to repay a set amount each month based on the money they have left over after meeting essential living costs, while lenders suspend the majority of interest and other charges.
People are charged a one-off sum equal to the first monthly repayment to set up the plan, with a 16% management fee deducted from subsequent monthly payments.
Source: channel4.com
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