Rising debt problems in the UK and how different classes cope
UK consumer borrowing remains to rise unprecedentedly.
14:51 11 June 2014
It is feared that a lot of UK households may be looking forward to harder times as the heads of families start to feel the effects of cyclical deficit and finding it harder and harder to support their families with their low salaries.
Debt makes the gap between rich and poor even more obvious as those who are on the lower income bracket have a hard time meeting their repayment schedules while those who are with higher incomes do not encounter that same problem even if they owe much more.
A third of the people seeking the help of debt management firms in regard to their debt problem bring in less than £20,000 annually to the household coffers.
Excessive Fees
Using the information culled from different management firms, it is estimated that an individual with low income has a debt averaging to £18,500. The study shows that low salaried individuals spend £100 more than their monthly earnings. Contrarily, clients with higher income who have an average debt of £40,000, is left with more money to spare even after they have settled their repayment dues.
Both groups, though, can be victimized by debt management companies wielding their excessive fees and which issue terms and conditions that are often misleading and flawed. The fees which can go as high as £5,000 is built in the loans thus adding to the problem already experienced by individuals striving to deal with their multiple debts.
Debt Relief Order (DRO)
The government has designed a solution for low income individuals that see no solution with their debt problem and have no collateral to give their creditors but would not want to file for bankruptcy.
Individuals who have less than £15,000 and with assets less than £300 will be eligible to file for a DRO. A DRO will cost £90 but will allow low income individual to experience some breather from the stress caused by their insurmountable debts.