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Original poster

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

271 replies

Lesterzap · 16/08/2023 21:02

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?

OP posts:
ComtesseDeSpair · 16/08/2023 21:26

I can see how it might happen. I have about £80k of available credit to me across various credit cards and (because I don’t actually use any of it, as is always the way) the lenders constantly email me encouraging me to use it with interest free promotions or cash back offers. If I was of a mind to start using it, a couple of nice holidays and a new car alone might get me into debt for half of what I have available. And if I was using it over the years and only ever paying minimum payments, it would soon rack up higher.

Ninacampbelltiled · 16/08/2023 21:26

Yes 20k very normal I'd imagine

calmcoco · 16/08/2023 21:26

VanCleefArpels · 16/08/2023 21:22

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.

This is human nature - if you're fucked you might as well be completely fucked.

You can't think about it as real or you'd break mentally.

multicolouredbunting · 16/08/2023 21:26

Im 3k in debt and I'm panicking. Will calm myself down.
blimey people nearly 100k in debt 😳

Original poster
Lesterzap · 16/08/2023 21:28

multicolouredbunting · 16/08/2023 21:26

Im 3k in debt and I'm panicking. Will calm myself down.
blimey people nearly 100k in debt 😳

Apparently so

OP posts:
yoshiblue · 16/08/2023 21:30

Doesn't surprise me at all, seeing people trawling around our major city shopping centre with several bags from high end shops, designer clothes, make up/filler and driving home in a PCP car. Too many people aspire to a lifestyle they can't afford and borrow to pay for it.

Anxioys · 16/08/2023 21:31

The PCP is probably the driver, that can be 40k plus debt easily

WelshNerd · 16/08/2023 21:31

I worked in financial services, not in debt management, during the financial crash and the similarities between then and now are worrying. UK unsecured debt is bigger than ever and interest rates still going up.

Glwysen · 16/08/2023 21:32

The credit card companies need to be held responsible and there should be much tighter regulations in place - I work in a foodbank, we have so many people need help because of debt issues.

but i suppose if people didn’t have access to credit, spending would decrease and the economy would tank….

Scottishskifun · 16/08/2023 21:32

Things can easily add up together especially when so many things can be put on finance from kitchens, cars, sofas add onto that loans taken out for things it can easily spiral.

I do think they should teach finance and budgeting much more in school.

I had 12k debt from finishing my masters and another 14k student loan ontop of that. That was enough for me and thankfully I was able to pay it back but only because I lived cheaply for several years and was able to do so as no children at that point.

pocketpairs · 16/08/2023 21:35

It's really not common at all, there's a small minority that are careless with freely available credit, but the majority will just have typical mortage, car finance, etc. But they can offset that against their 6-month rainy day fund, and other investments.

Only know 2 people in debt; 1st spent £90k on house renovations and 2nd spent too much on wedding.

Hawkins009 · 16/08/2023 21:36

I know it varies from person to person.
Is some of the debt from people wanting eg the designer lifestyle and expense food etc,
Or is it more just survival and the credit card was the lifeline
Or other factors

sleepyscientist · 16/08/2023 21:39

If we're including the big ticket items 109k mortgage, 25k car loan, 10k car loan, 10k left on the renovation loan and possibly 2-3k on the credit cards. We spend less than half our monthly income on all expenses including paying it back. The cars are worth more than the outstanding finance on guaranteed value scheme. It's quite easy to hit 100k once you start including cars.

Original poster
Lesterzap · 16/08/2023 21:39

pocketpairs · 16/08/2023 21:35

It's really not common at all, there's a small minority that are careless with freely available credit, but the majority will just have typical mortage, car finance, etc. But they can offset that against their 6-month rainy day fund, and other investments.

Only know 2 people in debt; 1st spent £90k on house renovations and 2nd spent too much on wedding.

I suppose that we never really know how much debt people have. As I said m, I’ve only ever owed 5k on top of mortgage, however I don’t think that anyone other than dh knew that fact

OP posts:
bonzaitree · 16/08/2023 21:41

People never talk about money so how would we know

i have wondered how people are paying for things before though!

shivawn · 16/08/2023 21:42

My only debt right now is €385 outstanding on an interest free loan for a sofa from DFS, I could easily clear it right now but I'm happy enough to let the €29 trickle out of my account every month.

I can easily see how people could have 70k in debt for something like home improvements, business ventures or cars. I doubt many people are getting into that much debt over designer handbags.

It all depends on your ability to repay the debt as well, big difference between manageable debt and unmanageable debt.

OutragedSloth · 16/08/2023 21:42

I used to work in a similar line of work. It was definitely shockingly common. I wouldnt have bat an eyelid at 50k in credit cards. I will say that while 20-50k of unsecured debt arising from loans/credit cards was common, when you got into the 75k-100k+ space it was more often shortfalls on property sales/funding business losses/ divorce etc than your run of the mill excess spending consumer debt.

RhymesWithTangerine · 16/08/2023 21:43

Cars. The way people pay for cars is pretty crazy. i have no idea how people are paying for them.

There must be people going hungry so they can drive an Audi. It’s weird.

PrimarilyParented · 16/08/2023 21:45

I have 17k that is a combination of car (7k) and a loan for house renovations (essential as the place was unliveable when I bought it), but this doesn’t worry me as I can afford the repayments and it will be cleared either through my repayments or when I sell the house. There was a time this debt have terrified me, but I’m comfortable with it as it’s about 1/3 of my yearly income and in both instances it was essential (I had to have a decent car after the 20 year old one failed on me too many times leaving me without transport in a rural area and the house had to be renovated).

pompomdaisy · 16/08/2023 21:46

It depends on the situation. My brother had quite large debts at one point but he was getting his business off the ground but now he's completely loaded and retired. There's debt and there's debt .

Nomorebollocks · 16/08/2023 21:50

@RhymesWithTangerine

we were back in the UK recently and it was very noticeable how many very expensive and brand new cars are around. FIL lives in pretty bog-standard Persimmons estate, nothing particularly flash, but the car parks are full of Audis, BMWs, Range Rovers etc. Just bizarre.

Original poster
Lesterzap · 16/08/2023 21:50

OutragedSloth · 16/08/2023 21:42

I used to work in a similar line of work. It was definitely shockingly common. I wouldnt have bat an eyelid at 50k in credit cards. I will say that while 20-50k of unsecured debt arising from loans/credit cards was common, when you got into the 75k-100k+ space it was more often shortfalls on property sales/funding business losses/ divorce etc than your run of the mill excess spending consumer debt.

I suppose that 70-100k could be a couples combined debt as opposed to an individual

OP posts:
Trainstrike · 16/08/2023 21:50

RhymesWithTangerine · 16/08/2023 21:43

Cars. The way people pay for cars is pretty crazy. i have no idea how people are paying for them.

There must be people going hungry so they can drive an Audi. It’s weird.

Yes I find the car loans strange, each to their own though I suppose... My friend recently told me she pays almost £400 a month for her car, and it's PCP so not even hers at the end of it. I took out a low rate loan with my bank for about £6k to buy a car and part exchanged my old one. I'd much rather put £400 a month towards day trips and holidays as my luxury item.

bonzaitree · 16/08/2023 21:53

OutragedSloth · 16/08/2023 21:42

I used to work in a similar line of work. It was definitely shockingly common. I wouldnt have bat an eyelid at 50k in credit cards. I will say that while 20-50k of unsecured debt arising from loans/credit cards was common, when you got into the 75k-100k+ space it was more often shortfalls on property sales/funding business losses/ divorce etc than your run of the mill excess spending consumer debt.

£50,000 just in consumer debt is common. I’m so surprised by that.

do you have any insight into how people get into this kind of debt?

My gut reaction is that I’d rather live in a bed sit eating beans than get myself into that level of debt but of course I know it’s not that simple. Is is MH issues, divorce, illness…

Bluesclues1 · 16/08/2023 21:54

pocketpairs · 16/08/2023 21:35

It's really not common at all, there's a small minority that are careless with freely available credit, but the majority will just have typical mortage, car finance, etc. But they can offset that against their 6-month rainy day fund, and other investments.

Only know 2 people in debt; 1st spent £90k on house renovations and 2nd spent too much on wedding.

How on earth could you possibly know how much debt everyone around you has?

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