People in extreme debt - is this really as common as I’m told?

[Lesterzap]

Chatting to my friend today who works id debt management. She was saying how busy it’s been since covid and COL crisis.

I mentioned how someone I know had ended up owing 20k. According to my friend 20k of debt is now a drop in the ocean and that there’s been a real increase in people in higher incomes owing 70-100k!!! Totally shocked by this. Aside from my mortgage I’ve never owed more that 5k (car loan)

surely that level of can’t be common?

I’m sure it’s fairly common.

In my mid-20s I had about £26k on credit cards and loans, which was equivalent to my annual income, and it wasn’t especially unusual. I’m sure people on bigger incomes have bigger debts.

I owed over 25k for my divorce, 15k debt my ex ran up plus my own cc it's quite easy if you have a series of unfortunate events.

You clearly have no idea as to why people could get into debt.

I have 2.5K worth of debt and I thought that was a lot😅

It's common, I think the average unsecured debt in the UK is around 15k.

I used to work at a community centre type place. The young women I came into contact with were all 20-25, 2 or 3 kids, normal jobs in shops or offices. I mean not on the bones of their arses, just normal women.

They were all in debt to the tune of 3-4 times their annual income. They saw this as totally normal, just another life expense.

This was about 8 years ago. Heaven knows what it's like now.

Im
not judging anyone, I’m sure that there are many reasons why it happens. I was just shocked by the amount

I had £45k of unsecured debt at one point.
It was terrifying

I'm in about 15k of debt from cards and loans and that terrifies life out of me.

It's slightly reassuring it's more normal but I still find it stressful and want out asap but it feels a never ending circle. Will never manage a mortgage with this

Car loans seem to have exploded in the past 10 years with people driving brand new £40k cars on PCP. I suppose that coupled with credit cards to cover larger purchases makes it pretty easy.

My debt two years ago was £35k!!!!! Completely within my means to pay but I saw the light and it’s now down to about £12k. It’s very easily done even without a COL crisis

Yes it's common.

Many people are financially precarious.

It has been this way for many years, butting rapidly worsened.

It's important to realize that you can get loans and credit that are almost totally disconnected from your ability to pay. I mean, you will be offered far more than you need!

Yes but 75-100k??

Not surprised. Pretty easy to run up £15-20k on credit cards while earning ordinary money with ordinary outgoings.

Right now, retired but on a decent pension, I've 4 cards each with £12k available credit.

Treble the income and access to £80k headroom isn't difficult.

Yes some people.

Why do you doubt your friend?

I don’t, I’m just shocked

I have about £25k unsecured debt (one loan and some credit cards). It's just under half my income. I find it quite stressful... but relative to my childcare costs, my housing costs, etc, the costs of my various payments against my (mostly 0%) debt just don't feel like huge numbers.

I sometimes fantasise about waving a wand and starting afresh with no debt, though.

I find that astonishing. But it would explain a lot of lifestyles that bear no resemblance to likely salaries
(I realise inheritance, help from parents and other sources of income can also be the reason)

https://www.bankofengland.co.uk/statistics/visual-summaries/household-credit shows overall trends. See the improvements in COVID then worsening again.

https://themoneycharity.org.uk/money-statistics/

Averages disguise a lot. A debt manager only sees those with debt.

Credit card and other personal finance is a major concern.

At one point I had £37k of unsecured debt and I was paying it back at the rate of about £100 per month, at a mixture of a small loan and lots of 0% credit cards. Back then if you were on a 0%, credit card companies would only ask for £5 a month repayment.

I still have debt now - about £13k but I'm proud that I managed to get it from £37k to £13k. I'll continue to chip away at it until it's all gone.

I wouldn't be able to sleep at night. I guess a lot of them just enter into debt management and don't have to pay it off. I have worked for housing associations in the past and shocked by the huge amount of rent arrears some people have, but these are usually people on low incomes so it's understandable how it happens, especially with bedroom tax etc.

Impressed at the people who paid down huge amounts. I bet that feels great. I had about £6 k debt after I split with my ex but I hate debt so threw everything at it to pay it down fast. Thankfully the children were young enough to be happy with hand me downs and trips to the park

I give debt advice. In my experience people get really anxious about low single figure debt, but when it gets above £10-£15k it just becomes like white noise, they ignore letters etc and then think someone can magically come up with a DRO to wipe the slate clean. The level of denial is unreal.

Have a little read of the Debt-Free Wannabe board on MSE for insights!

It's hard for people. Some is bad choices but some people had to put their whole lives on the credit card during COVID (those 3 million the government left without any access to furlough).