Saturday, August 25, 2007

7% of adults express grave concern over their exposure to debt

Millions Worried By Rising Debts

7% may not seem like a lot but according to this report 7% is around 2 million adults. When questioned people tend to not confess to debt problems or may not realise their level of exposure because they have just MEW'ed. What hits me as frightening is that despite interest rate rises over the last year a quarter of consumers have increased their borrowing. For balance the article also states that just under a quarter of those surveyed were debt free with another 40% were not worried about their ability to repay their debts.

Posted by denzil @ 12:41 PM (1147 views)
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19 thoughts on “7% of adults express grave concern over their exposure to debt

  • So if these 2 million adults have difficulties paying off their debt and decide to try to write off most of their debt (I don’t know what the criteria is for IVA), how much of an impact would this have on the banks?

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  • stillthinking says:

    The banks go bust if enough of them default. I think you haven’t heard my pithy copied statement so I will repeat it for your benefit. “Problem one needs interest rates to go up, problem two needs interest rates to go down.” p1 is inflation and excessive borrowing, p2 is debt default and possible credit crunch.
    The banks are going to try and force the money out. Like the last crash, banks only repossessed when the prices were still ok, after they tank this year banks won’t repossess, they will just try and get as much cash as possible from the debtor who won’t be allowed to default. As has become, like the good old days, indentured.
    That good old saying “In for a penny, in for a pound.” certainly seems to hold good today. If I was facing bankruptcy anyway, no choice I’m a gonner, and I suddenly remember one of my many many credit cards still has a bit left on it, I picked up my jacket and head off to a decent restaurant. I wouldn’t be paying for it after all.
    The nanny state can help you learn to read, attempt to cure your sickness after you wait a while, but I wonder what they do about chronic debts. Hmmmm.

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  • stillthinking says:

    Also you can’t IVA or bankrupt if you own a house, because you can sell the house to pay your debts. Genuine failures come out of pension schemes etc. somebodies savings.

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  • @stillthinking

    “you can’t IVA or bankrupt if you own a house, because you can sell the house to pay your debts. Genuine failures come out of pension schemes etc. somebodies savings.”

    Aah. I didn’t know that.

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  • The Capitalist says:

    Er hang on a minute 40% are not worried about their ability to pay their debts – let me guess…are some of these Mewers who feel rich thanks to house price inflation? I reckon this is what makes our grand canyon of debt so vast… and now the rope-ladders are being drawn up. Rattlesnakes and scorpians (banks) feeding time.

    I say one thing for Islam – it forbids usury.

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  • japanese uncle says:

    These 7% are probably berter risks as they are at least aware of their problems. How many more are clearly in trouble, though they are not capable/straightforward/frank enough to appreciate it as such?

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  • I’m not sure stillthinking is right on that one.

    Opinions?

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  • In the case of bankruptcy ownership of your house and any other assets pass to the offical receiver and it will be sold after a ‘Reasonable’ time. In the case of IVA it would depend on the agreement you reached with your creditors. You would be expected to release equity you have in the house if practical (via a remortgage) but you are not obliged or even expected to sell. The idea is that you are left in a stable condition to make “some” contribution.

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  • lifes2short said:
    >>I think virtually all are just the same as the hated BTL landlords

    Can you explain that bit?

    As I wrote in the comment 7% does not sound much but 2 million adults is a hell of a lot. So is there a problem, your guess is as good as mine.
    As for wishing misery on homeowners, I would certainly not want that but if people have blindly spent too much then that is not my problem and harsh though it may sound I will certainly not lose sleep on their behalf.

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  • Ihopeitgoeswithabang says:

    Lifes2Short4YOUR!S***
    I cant really see how a house price drop would inflict misery on the vast majority of home owners? That statement is complete rubbish.
    Even a reduction in house prices of 30% would not affect the VAST majority of home owners. Sure it would see the value of their asset drop, but if they are only ever going to live in it what does that matter?
    It would only badly affect people who would fall into negative equity – that is not a vast majority!!?

    I dont really see ‘most of the people’ on this site wishing misery on anyone.
    I only wish misery on EA’s Since I know that a large number of them would without blinking an eye stuff joe-bloggs on the street for anything they can.
    Whilst that may not be all of them from experience it is enough of them to justify the comment – unlike yours.

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  • lifes2short, I blame the people who own more than 10, 20, 50 houses, not the people who have just one home. As for the hostilities of the posters, this is to be expected. They start off with open minds and then time slowly gets them so frustrated that they become more and more radical and ruthless. Only one other group in society shares this progressive mindset; terrorists. So if prices do not drop, it will be amusing to see how far these posters are willing to go.

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  • stillthinking says:

    In fact I assumed the IVA details which are a voluntary arrangement after all. I don’t see a creditor coming to any ‘voluntary’ arrangement to lose money when they can see a big asset like a house. After all, lots of people don’t own houses so expecting to keep some asset you can later sell while avoiding paying your own debts off might be considered a bit rich.
    Personally, I wouldn’t like to be the person who has to go and get the money so to speak, off some struggling family, but I am sure someone is.
    Maybe the problem is that when people have a mortgage they genuinely believe they own the property, but they don’t. They have options on the property not ownership. They can’t give it away, it isn’t theirs. Thats where lifes2short4shit misses the point, there are very few home owners, even the baby boomers are at the tail end of their mortgage.
    The Labour voters idea that somehow it will be alright because of liberal laisse faire is wrong, the government is wasteful, and not all powerful, they are watching this in the same way I am. If there is a house price crash people’s homes will be taken and sold at a loss at an auction, they will further be obliged to repay the negative equity. Result, no house and and a debt of 50k for nothing. So kind of serious, and warranted government attention earlier. Add 500,000 immigrants per year, and 300,000 leaving, a dire manufacturing sector, an economy based on 40% GDP from the city currently laying people off as we speak, and you get the natural conclusion of 10 years of Labour. I sincerely hope that Labour voters do get it in the neck personally because they have caused such a dirty vile mess we won’t get out of it. Thatcher was a one off. Look at the opposition now. There isn’t anyone.

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  • backseatcrasher says:

    so if 7% ie 2m are in trouble, who the hell are the 25% or 7m that are debt free? Do they mean unsecured debt free or are they all outright home owners?

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  • The Capitalist said… “I say one thing for Islam – it forbids usury”

    They also forbid the death of non-combatants. Oops.

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  • I would like to ask the following questions.
    1) Are these 2 million home owners?
    2) How many dependents do these 2 million people have. If these are the bill paying adult, then the scale of problem is much much more.
    Say if you had 2 dependents (you could have children/spouse/parents) this means you have around 6 million in trouble.
    3) How close to the edge are they of default. I’m someone even if I have a £1 of debt I get worried and some people don’t get worried with £1 million of debt.

    And I think in IVA you might not have your home reposessed, it depends on you arrangement. Thats why people are going for IVA because there is a chance of you not loosing your house unlike bankruptcy where you have to sell to pay.

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  • backseatcrasher. “so if 7% ie 2m are in trouble, who the hell are the 25% or 7m that are debt free? Do they mean unsecured debt free or are they all outright home owners?”

    I’m debt free – I live in rented accom. My parents are debt free – paid off mortgage years ago. My sibling is debt free – lives with parents. My nan is debt free – lived in social housing for years. It is possible!

    The Capitalist (post 5) mentioned Islam forbidding usury. Both Jews and Christians are warned in Proverbs chapter 22 verse 7 that “the borrower is servant to the lender”

    So perhaps the 25% include muslims, jews, christians as well as financially responsible children who have learned from financially responsible parents.

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  • Lifes2short4shit says:

    @ Denzil

    In some way, shape or form you will benifit from the houseing market when it crashes albeit you may a bigger place or even buy a place, I dont know your presonal situation………………….the same as a BTL landlords you will profit in some way.

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  • planning4acrash says:

    I bet that more people have debt problems than admit it to themselves, let alone a stranger. Many more will have them once mortgage rates begin to reflect 5.75% and Libor rates for those coming of fixed term mortgages.

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  • p4c. I agree. Market surveys are known not to be 100% reliable because people will often answer what they feel they should be answering rather the the actual facts. Think about those people on health improvement TV shows who admit to buying fruit & veg because it makes them feel better as they go through the checkout. They then throw it out later in the week.

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