Mon, Feb 18, 2008

Rising household bills and the impact of the credit crunch are making it more difficult for people to cope with their borrowing, a new report has suggested.

Figures compiled by Chiltern show the average income of a person on an informal debt management plan has climbed from £20,540 to £23,432 since August 2007.

In the same period the average amount owed has fallen £26,662 to £26,344 and Chiltern's Joanne Gill said that taken together the two statistics are a sign that outside factors are conspiring to influence the ability of debtors to meet their credit commitments.

The credit crunch has restricted the availability of debt consolidation loans and rising mortgage interest payments and food bills have also had an impact.

"Nearly 500,000 people have missed a mortgage payment within the last six months and with the reduced level of available credit for people with imperfect histories, household finances are taking a battering," said Ms Gill.

Figures compiled by the money education charity Credit Action show that in the 12 months to November 2007 the average annual amount of interest paid by households to service their debts increased by £558 to £3,794.

Source: http://www.moneynews.co.uk/4148/credit-crunch-hits-debtors/