New research carried out as part of a larger UK poverty project has estimated that the average low income family in the UK is running up huge amounts of personal debt due to changes in welfare payments. The change in how welfare is spent has meant an increased average level of personal debt, soaring 29% since October to now stand at £3,000 per household.
Respondents in the survey were shown to be running up personal debts worth £52 a week in order to cover the rising cost of living. 80% of participants had high level problem debts and half of those surveyed said they had no disposable income left once bills and other household essentials had been paid for each month. The biggest factor to this was thought to be because of welfare reforms such as the controversial bedroom tax. In many cases families were left with as little as £3 per day for a food budget.
In total the research found that average household debt stood at £3,000 which has risen by 29% since October 2013, an increase of £670. Families are thought to be paying about £34 a week repaying debts, a staggering sum considering that the average household income is just £178 pw (almost 20%). Many of the respondents indicated that they have no idea how they will be able to afford or if they will ever be able to pay the loans back, some had even admitted to turning to ‘loan sharks’ in an effort to keep their heads above water and one in seven had debts that would take four or more years to pay back.
With the rise in the cost of living continuing to dampen the economic growth we all hear so much about, problem debts needn’t ruin lives in the long term. McAlister & Co are experts in personal and corporate debt advice and with specialised teams for any situation you can be assured of the best possible outcome. If you or anyone you know needs debt advice then do not hesitate to get in touch, all our advice is confidential, professional and impartial.