The Debt Pandemic

[Spirit]

Between us we owe £1 trillion and we can't afford the repayments. British consumers have a serious dose of borrowing sickness and, as Liam Halligan warns, it may be fatal to the economy

Those who say that there are no distressed sellers should read this...

Until recently Sam Drew was among the middle-income consumers keeping the economy on song. But, although he lives in Surrey's commuter belt and holds down a respectable £30,000-a-year job, he is "in a state of financial despair".

Despite appearances, this 39-year-old professional is servicing £24,000 in unsecured debt, on two credit cards and a personal loan. "I'm literally counting pennies before buying a pint of milk," he says. "My situation is so dire I'm deeply depressed and find it hard to see a way out." A "huge chunk" of his income goes on debt repayments. "I've already had to sell my house. But, with my finances still a mess, I can barely afford the basics."

Drew is among millions in difficulty. Since the start of 2005 the number of county court judgments served on those with unsecured loans has risen by a quarter. That's one reason why August saw an extremely rare credit card net repayment. For only the second time in 11 years, the public's monthly card repayments exceeded new borrowing. In other words, maxed-out households called a halt. And with high-street spending flat and retailers bracing themselves for the slowest Christmas in a generation, this retrenchment is seriously affecting the wider economy.

For his part, Drew accepts his responsibilities. "My situation is largely my fault," he says. But he insists that "the lenders made it far, far too easy" to run up debts. "I was plodding along nicely until invited to take those credit cards," he says. "That was the slippery slope. The company kept raising the credit limit. Pretty soon, the monthly payments exceeded my salary."

http://www.newstatesman.com/nssubsfilter.p...RN=200510240005

Edited October 22, 2005 by Spirit

[Matt]

It's only a matter of time before this kind of article moves from the alternative press to the mainstream. I'd give it till the new year after a disastrous xmas for retailers and no rate cuts and the news will be imposible to ignore.

[Arsene Wenger]

The number of people entering into I.V.A.'s or being made bankrupt must be on the increase.

Any statistics available?

[Maynard]

I'm fed up with hearing thiese people balming the banks and card companies for "making it too easy" to get credit.

These idiots haven't been forced to get credit cards, it's their own faults and I have no sympathy for them.