10 March 2006
Problem debt is growing at a faster rate than overall unsecured debt, according to the latest statistics released by the Consumer Credit Counselling Service (CCCS).
The figures reveal that in 2005 the average unsecured debt of a client starting a debt management plan with CCCS increased by 10.5% from £26,630 in the fourth quarter of 2004 to £29,400 in the fourth quarter of 2005.
Total outstanding unsecured debt in the UK increased by 5.9% in the same period.
The CCCS said that the increase in Debt Management Plan (DMP) debt suggests that a greater proportion of the money being lent by banks and credit card companies became "problem debt" in 2005 than would be expected.
This is in line with recent retail banking results which show a rise in the percentage of lending which has been written off as bad debt.
Commenting on the findings, CCCS chairman Malcolm Hurlston said: "Although it is bad news that problem debt has increased over and above the rate of unsecured debt growth, more people are finding their way to CCCS to find solutions for their financial difficulties.
"There were signs from our data over the course of 2005 that debtors are waking up to their financial situations and seeking help earlier for their debts. We hope that consumers prove themselves even more prudent in 2006."
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