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Unsecured personal debt is outweighing Brits income

Consumers are showing worrying signs of being unable to cope with personal debt, according to new analysis from one of the largest debt intermediaries.

Amber-Ainsley   Pritchard

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A recent consumer debt report from data provider and debt solutions firm TDX found unsecured personal debt outweighs the average monthly earnings of Brits.


The report found more than a quarter (28 percent) of Brits fear they may not be able to keep up with repayments on their personal debt.


Data from the Office for National Statistics found the average weekly earnings, before tax, in the UK now stands at around £502. TDX said one in four of respondents owe more than £2,000.


Of the 2,100 adults surveyed, more than 40 percent said they are planning on coping with their debts by changing jobs or taking on a second job.


TDX said this makes it harder than ever for creditors to gain a comprehensive view of their customers’ financial circumstances to responsibly recover money owed.


The report also found that less than one in 10 of Brits would choose to seek help from the company or lender they owe money to if they needed financial help.


TDX said consumers are looking for businesses to be supportive and offer practical solutions to any financial difficulties they encounter, such as a reduction in repayment costs, a reduction or break in interest being added to their debt or a part write-off of their debt.


The company said the cost of “getting it wrong” could be substantial to businesses with 46 percent of consumers saying they would not deal with a company again if it provided poor service at a time they were suffering financial difficulties, or if they failed to provide solutions that might help improve their situation.


Richard Haymes, head of financial difficulties at TDX Group, said: “Our research shows that creditors need to act now to plan for a spike in problem debt.


“We’re seeing a change in the mix of creditors who are owed money, reflecting a growth in non-traditional credit default. Over time, this will change the payment hierarchy, and with the profile and payment decisions of those who owe money changing, the need to understand the customer is more critical than ever.”


Haymes said major issues such as the general election and Brexit will have an impact on collections and recoveries in the coming months.


He said: “The key focus will be to maintain flexibility around strategy and suppliers, while also building capacity to deal with an overall increase in delinquency and default. Companies must respond now to limit their exposure to rising bad debt levels.”


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