17 October 2006
Divorcees are more likely to rely on personal loans and other forms of borrowing, new research indicates.
Alliance and Leicester found that divorcees have above average levels of debt and are more likely to borrow via loans and credit cards.
With average debts of £4,984, excluding mortgages, divorcees have the highest debt relative to income of any group and consequently spend more of their income servicing debts.
"Splitting up clearly gives rise to a lot of costs, including setting up a new home," said Chris Rhodes, managing director of Alliance & Leicester retail banking.
"This is reflected in the fact that the recently separated have the highest overall level of debt at £6,262.
"However, over the years, divorced people's finances do not seem to improve - showing how long-lived the effects of relationship breakdown can be."
Divorcees hold the largest personal loans of any group, having borrowed an average of £2,789, often to finance the costs of setting up a second household following their separation.
In contrast, married individuals have average personal loans of £1,130 and single people just £1,104.
"Divorce is financially as well as emotionally costly," Mr Rhodes concluded.
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