• Home
  • About Us
    • Our fees and charges
    • Terms of Business
    • Complaints procedure
    • Agreement to Mediate
    • Team
    • Privacy Policy
  • Consultation
  • Solutions
    • Insolvency Support
    • Negotiated Settlements
    • Personal Bankruptcy Experts
    • Mediation
    • Comparison of Solutions
  • Case Studies
  • Testimonials
  • Blog & News
    • Press & Awards
  • Links
  • Contact us
  • Home
  • About Us
    • Our fees and charges
    • Terms of Business
    • Complaints procedure
    • Agreement to Mediate
    • Team
    • Privacy Policy
  • Consultation
  • Solutions
    • Insolvency Support
    • Negotiated Settlements
    • Personal Bankruptcy Experts
    • Mediation
    • Comparison of Solutions
  • Case Studies
  • Testimonials
  • Blog & News
    • Press & Awards
  • Links
  • Contact us

What drives people into unmanageable debt?

By Mr Bankruptcy

30th September 2024

Facing an unmanageable debt is a tough experience but someone not in that situation might assume it was your fault – you can’t manage your finances or spent money recklessly. But it’s rarely as black and white as that; and debt problems are affecting more and more people in the UK.

According to The Money Charity the average level of personal debt in the UK at the start of 2024 was almost the same as the average UK annual wage – and it’s rising. And the reasons why individuals get into that situation vary hugely with personal circumstances.

The most common causes of personal debt

According to the data collection service Statista, common causes of household debt in 2022 included, in order:

  1. Lack of financial control (17%)
  2. Cost of living (15%)
  3. Unemployment (12%)
  4. Drop in income (10%)
  5. Health problems/injury (9%)
  6. Broken relationships/separation (5%)
  7. Covid-19 (4%)
  8. An unplanned expense (3%)

Budgeting and the cost of living

I’ve written before in this blog about the importance of working to a budget to stay in financial control, especially if your means are limited. Knowing your income and outgoing can be crucial to identifying early on if you’re building up problem debt.

But life has become ever more difficult since the 2008 credit crunch, with global events, structural economic deficiencies and government policies adding to our woes. As a result, the price of essentials such as food, fuel, utilities and rent, have gone up relentlessly in recent years. Many people in low-income jobs who were already living on the edge of affordability are now struggling to make ends meet and can’t put any savings aside for a rainy day.

In addition, interest base rates are returning from record lows to more historic norms of around 4-5%. Even better-off borrowers are now struggling to absorb higher interest payments on their mortgages, business or car loans.

And when things get hard, it’s too easy to start racking up debt on a credit or store card without keeping track. Cheap retail credit is a thrill and looks like an easy solution at the end of the month, but failure to keep up with even minimum repayments can quickly pile up debt until it morphs into a serious financial problem.

Resilience

This leads on to the issue of resilience. According to the Bank of England, the average amount in a UK savings account is £17,365 but, when asked, around a third of adults had less than £1,000 in savings; many had nothing at all.

This explains why just over two thirds of those asked didn’t think they could survive for three months without work before borrowing money.

The upshot is that it would only take one unexpected event – a car needing replacing, a leaking roof, a family death – or a drop in income – through losing your job or serious illness – for someone who was just getting by to fall into an unmanageable debt spiral, especially if they have a large, regular outgoing such as a mortgage or business loan repayment to keep up.

Divorce and relationship breakdowns

It’s another event that no-one expects or wants, but households built on the basis of two incomes can be financially devasted if one partner moves out.

Legal expenses and maintenance, as well as a painful division of assets, can leave both sides struggling.

Business problems

The business environment is always challenging, and many businesspeople have to take on debt with a bank, either to start up or to tide their company over the bad times, in the hope that it moves back into profitability. However, this doesn’t always work out.

If, as a business owner or director of a limited company, you made a personal guarantee agreement with a lender, then you are still personally liable to repay the loan if your business defaults or becomes insolvent. If the debt is secured against, say, your house, you can lose it.

Managed debt

Properly planned and managed debt can be a good thing so long as repayments are affordable, allowing you to invest in something that will transform you or your family’s life, such as a car to take on a new job or a mortgage for a larger home.

But if that debt becomes unmanageable it can impact your whole life – friends, family and your mental health. No-one wants to be in that position, so we take a non-judgemental approach with all of our clients when we sit down with them to explore their circumstances and options open to you or your business.

Even when there seems to be no way out, there is always support available to talk – a professional debt advisor, charity or someone close to you – to help you see your way forward.

James Rosa Associates

James Rosa associates is a firm of debt advisors and debt adjustors. With a supportive, friendly approach, we offer a full range of advice and professional services to individuals and business owners/directors who face unmanageable debt and are looking for a solution. We also help anyone involved in a civil or commercial dispute with a range of services:

  • Insolvency support
  • Negotiated settlements
  • Personal assisted bankruptcy
  • Mediation

We are authorised and regulated by the Financial Conduct Authority (FRN665061) to work with clients to produce bespoke solutions to fit their specific circumstances.

Find out if you qualify for a free consultation

If you need to tackle an unmanageable debt or bring a dispute to a swift and satisfactory resolution, then contact James Rosa Associates, ring 0845 6807217 or email enquiries@jamesrosa.co.uk and find out whether you qualify for one of our free consultations.

Please be advised that all views expressed in these posts are those of the author and not of James Rosa Associates ltd.

Categories

  • Bankruptcy (68)
  • Case Study (12)
  • Economy (51)
  • Events (23)
  • Finance (112)
  • Guest (19)
  • Insolvency (97)
  • Mediation (13)
  • Mr Bankruptcy (132)
  • Newsletter (9)
  • Other (14)
  • Personal Guarantees (13)
  • Press Release (18)
  • Turnaround (7)

Recent posts

  • Preserving your future aspirations in the face of unmanageable debt
  • How sustainable is your debt situation? Your credit report reveals all
  • Strategies for achieving financial freedom from debt
  • Understanding the differences between bankruptcy in England and Wales, and in Scotland
  • The link between debt and poor mental health

Archives

  • May 2025 (1)
  • April 2025 (2)
  • March 2025 (1)
  • February 2025 (2)
  • January 2025 (2)
  • November 2024 (3)
  • October 2024 (2)
  • September 2024 (3)
  • August 2024 (1)
  • July 2024 (1)
  • June 2024 (2)
  • May 2024 (1)
  • April 2024 (2)
  • March 2024 (2)
  • February 2024 (3)
  • January 2024 (3)
  • December 2023 (1)
  • November 2023 (2)
  • October 2023 (2)
  • September 2023 (2)
  • August 2023 (2)
  • July 2023 (2)
  • June 2023 (2)
  • May 2023 (3)
  • April 2023 (2)
  • March 2023 (3)
  • February 2023 (2)
  • January 2023 (1)
  • December 2022 (2)
  • November 2022 (1)
  • October 2022 (2)
  • September 2022 (2)
  • August 2022 (2)
  • July 2022 (1)
  • June 2022 (3)
  • May 2022 (2)
  • April 2022 (2)
  • March 2022 (1)
  • February 2022 (2)
  • January 2022 (2)
  • December 2021 (1)
  • November 2021 (5)
  • October 2021 (2)
  • September 2021 (3)
  • July 2021 (1)
  • June 2021 (3)
  • May 2021 (2)
  • April 2021 (2)
  • March 2021 (2)
  • February 2021 (2)
  • January 2021 (2)
  • December 2020 (1)
  • November 2020 (2)
  • October 2020 (2)
  • September 2020 (2)
  • August 2020 (2)
  • July 2020 (2)
  • June 2020 (2)
  • May 2020 (2)
  • April 2020 (3)
  • March 2020 (3)
  • February 2020 (2)
  • January 2020 (1)
  • December 2019 (3)
  • November 2019 (1)
  • October 2019 (2)
  • September 2019 (1)
  • August 2019 (3)
  • July 2019 (2)
  • June 2019 (3)
  • May 2019 (2)
  • April 2019 (1)
  • March 2019 (2)
  • February 2019 (1)
  • January 2019 (1)
  • December 2018 (2)
  • November 2018 (1)
  • September 2018 (2)
  • July 2018 (1)
  • March 2018 (1)
  • January 2018 (1)
  • May 2017 (1)
  • January 2017 (1)
  • December 2016 (1)
  • November 2016 (1)
  • September 2016 (2)
  • August 2016 (2)
  • July 2016 (1)
  • May 2016 (2)
  • March 2016 (2)
  • February 2016 (1)
  • January 2016 (1)
  • October 2015 (2)
  • September 2015 (2)
  • August 2015 (3)
  • July 2015 (3)
  • May 2015 (1)
  • April 2015 (1)
  • March 2015 (2)
  • February 2015 (1)
  • January 2015 (2)
  • December 2014 (1)
  • November 2014 (2)
  • October 2014 (5)
  • September 2014 (3)
  • August 2014 (3)
  • July 2014 (1)
  • April 2014 (3)

RSS FT News Feed

  • UK hits key figures in Russian oil trade with sanctions
  • Trump signals openness to cutting China tariffs ahead of Geneva talks
  • An American pope for the global south
  • Royal Navy head stepped back after probe into relationship with subordinate
  • Brace for disorder as the great power shifts begin

Sign up to our newsletter

Useful links

  • Home
  • About us
  • Consultation
  • Blog & News
  • Press
  • Contact us

Solutions

  • Insolvency Support
  • Mediation
  • Negotiated Settlements
  • Personal Bankruptcy Experts

Social

  • Facebook
  • Twitter
  • LinkedIn

The Old Rectory Business Centre
Springhead Road
Northfleet
Kent
DA11 8HN

T: 0845 680 7217
E: enquiries@jamesrosa.co.uk

© 2018 James Rosa Associates Ltd. All rights reserved.