The number of people spending more than 30% of their monthly income on unsecured debt re-payments has doubled over the past year, to 14% of the adult population, according to independent research commissioned by credit reference agency Callcredit.

The increase in the number of people using more than half of their monthly income to service unsecured debts has been even more dramatic, tripling from just 2% in September 2007 to 6% today.

The situation is worse for women than men: 9% compared with 4% (the figures for 2007 were  2% for both sexes), and both men and women between the ages of 35 and 44 appear to be struggling the most, with 10% having to devote half of their income to debt repayments.

Guidelines from the Department for Business, Enterprise and Regulatory Reform regard an individual as over-indebted if they spend more than 25% of their gross monthly income on unsecured repayments.

More than two-thirds of people (69%) think their financial situation has got worse over the past 12 months, with 35-54 year-olds feeling the pinch most: 73% feel it has deteriorated.

There is not much confidence about that things will get better anytime soon: 43% of individuals believe that their current situation is going to get worse over the next 12 months, compared to 24% who think it will improve.

The older age groups appear far more pessimistic than the younger ones, with 54% of all those aged over 55 believing that their situation will not improve over the coming year.
 
Almost half (49%) of young people (18–24), on the other hand, believe that their financial situation will improve over the next 12 months.
 
“The increasing proportional spend on unsecured debt paints a concerning picture of consumer finances within the UK, and this level of debt servicing would appear to be unsustainable,” said Owen Roberts, head of Callcredit Check, the consumer arm of Callcredit.

“With many people unable to see any light at the end of their financial tunnel, there is a perception that worse is still to come.  Our advice to any individual who is struggling with debt repayments is to speak with their lenders before things become unmanageable or contact an independent organisation such as the Consumer Credit Counselling Service to work out the best way forward.”
 

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