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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:
VanCleefArpels · 16/08/2023 22:25

calmcoco · 16/08/2023 21:26

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.

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Yes that’s a really good way of putting it

BIossomtoes · 16/08/2023 22:27

Tiredalwaystired · 16/08/2023 22:09

With graduates starting life £50k in debt I can imagine the fear of large debt is quite diminished from what it used to be.

I was from the days of a student grant, when I kept myself debt free with holiday jobs and didn’t have to pay tuition. Debt terrified me.

But now it’s an inevitable part of becoming an adult. So it’s normal, not frightening. Which IS frightening.

We need to change the language from student loan to graduate tax really, to keep the two things distinct.

This. I was horrified when a recent graduate told me their £60k debt wasn’t “real debt”. I guess if you’re comfortable with that level of debt it inures you to getting into more.

lovewoola · 16/08/2023 22:27

i agree that there isn't anything necessarily wrong with debt.

Peanutbutterandmarmalade64 · 16/08/2023 22:28

Problem is when you have to manage your debt based on minimum repayment expected. Can manage to get by on current income, but when that changes suddenly you're in deep shit

lovewoola · 16/08/2023 22:29

This. I was horrified when a recent graduate told me their £60k debt wasn’t “real debt”.

I don't see a student loan the same as running up things on a credit card. it's more like a tax.

ASGIRC · 16/08/2023 22:30

Apart from mortgage, I have about £350 on a 0% credit card, and even that feels a bit weird. Before mortgage, the most CC debt Ive ever had was about £2000, and that was paid off in a few months (on a 0% CC as well)
But quite a few of my friends have/have had thousands in debt, and felt it was quite normal, so I figured maybe I was the outlier.

Beenhereforever1978 · 16/08/2023 22:31

Peanutbutterandmarmalade64 · 16/08/2023 22:28

Problem is when you have to manage your debt based on minimum repayment expected. Can manage to get by on current income, but when that changes suddenly you're in deep shit

Which is why I'm so pleased MSE really pushed the benefits of overpaying your mortgage to the masses.

😃

Augend23 · 16/08/2023 22:33

Beenhereforever1978 · 16/08/2023 22:24

Yes, agreed. But the vibe I get on this thread is that some people view certain debt as bad (car finance) and some debt as fine (a kitchen on finance or student loan maybe).

Sevicable debt isn't anything to be frightened about. It's oerfevtly normal not to be able to afford a house all in one chunk, so you split the payments over a period agreeable to both you and the bank.

Lots of people couldn't afford a holiday/boiler replacement all in one chunk, so they split it over time with a credit card and perhaps pay some interest in order to have what they want or need at the time. I had a boiler replaced, it cost me X amount over X years and I paid X amount for the convenience of not having to find all of the money straight away. The debt was serviced on time and in full and my credit score has been very glad of it.

Do I think its right that credit scores should mostly rely on debt repayment to improve? Nope. But that's how things are.

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I mean a student loan is materially different from other debt - it's a restructured tax.

If your income drops off a cliff your mortgage, car loan and kitchen loan still need paying back. That's not the case for a student loan. (In the UK.)

BlossomCloud · 16/08/2023 22:34

BIossomtoes · 16/08/2023 22:27

This. I was horrified when a recent graduate told me their £60k debt wasn’t “real debt”. I guess if you’re comfortable with that level of debt it inures you to getting into more.

Show quote history

Student debt is only repayable when you are earning over a certain amount, so it's quite distinguishable from debts you still have to pay even if you lose your job etc.

(That said, i hated having student debt and was glad I had paid it off by my early 30s)

Soapyspuds · 16/08/2023 22:34

I think the banks have some responsibility for this. I am constantly being offered loans almost every time I log into internet banking

Have they disabled the 'no thanks' button?

Beenhereforever1978 · 16/08/2023 22:34

@Peanutbutterandmarmalade64

Sorry pressed send too soon. But yeah, that's also why so many people are being stressed by the interest rate rises, mortgages are stress tested for a reason, they're a massive debt!

A secured loan is all well and good until you're in negative equity.

Beenhereageskeepchangingname · 16/08/2023 22:34

Between my husband and I we probably owe roughly 5k

I know at one point we managed to get to about 15k between us

the biggest thing was probably the car finance , however we now owe £407 left on our car 🥳🥳 so paying that off has been the biggest part of that . Of course naturally the car is getting older but we are going to keep it for a while- while it lasts lol

JimnJoyce · 16/08/2023 22:36

I have £3k of unsecured debt which I really hate but at one point it was £19k. Divorce and Family Courts for CAO's and solicitor bills decimated my finances and I had to put loads on credit and get loans. Scary way to live.

Beenhereforever1978 · 16/08/2023 22:36

Augend23 · 16/08/2023 22:33

I mean a student loan is materially different from other debt - it's a restructured tax.

If your income drops off a cliff your mortgage, car loan and kitchen loan still need paying back. That's not the case for a student loan. (In the UK.)

Show quote history

Absolutely. It's still debt though, and in some cases I've seen even when the threshold is met for repayment it leaves the debtor in crisis.

Createwhatusername · 16/08/2023 22:37

I had a 2k debt in my late teens/early 20s, stuck my head in the sand and got a ccj. As an adult it terrifies me now but I can definitely see how easy it is to get into, especially with COLC.

I think it's a sin noone is taught about budgets and debt etc in school, I taught myself as I got older l, got a mortgage which is my only debt and now if I dont have it I don't spend it. Not always that easy though is it, especially when you've got kids. Not sure I can understand it from the higher earners, that surprised me, but definitely get it from the ones affected with no other route.

Awittyfool · 16/08/2023 22:39

Babyroobs · 16/08/2023 21:22

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.

How have you worked for housing associations and STILL calling it a bedroom tax? No one is taxed on bedrooms.

Whatawaytomakealivin · 16/08/2023 22:40

U

Peanutbutterandmarmalade64 · 16/08/2023 22:41

I talked to mortgage people 4 months before anticipated income drop, to explore options. Was told they wouldn't act until we were 3 months behind payment (= 6K) Not very helpful really. Then forced to remortgaged on much longer term in order to meet repayments, 20 years instead of 9 years, and had to pay extra repayment penalty for ending fixed rate deal early ro rub salt into wound!
I have always followed advice regards early communication with debtors, trying to agree repayment schedule etc in advance of anticipated problems. Last few years this just fell on deaf ears
Trying to be proactive doesn't always work out and this feels very unfair to me, and I'm sure many others in a similar boat

ifyougochasingrabbits · 16/08/2023 22:42

MinnieTruck · 16/08/2023 21:08

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

I have about £1500 and thought was a lot 😮‍💨😮‍💨

CissOff · 16/08/2023 22:42

We (DH and I) owe c£10k between us. Household income of around £100k in a relatively cheap part of the world. We could obviously pay it off if we were particularly bothered by it but prefer holidays and so we don’t prioritise it.

We recently had a £25k inheritance and have largely spent it on clearing car finance and a new bathroom, but some went on (another!) holiday.

My parents had this approach to life (not to their detriment either) so I’ve just adopted the same approach.

It doesn’t bother me - I’d like it gone but not enough to forgo holidays whilst the DC want to come with us. We pay little interest as have decent credit ratings and can shift it to 0% when needed.

Banditqueen12 · 16/08/2023 22:43

A quicj look on google tells me that in March 2022, average household debt was ober £33k. I have no debt. Other people have no debt. So obviously some people have much more than the average. It doesn't shock me.

Whatawaytomakealivin · 16/08/2023 22:44

I'm awful with money as were my parents. So I had no chance. Luckily I have a husband who is a high earner and good with money & has savings.

I'm constantly in debt. This time to the tune of 6.5k. It'll take me 5 years to pay it (0%)it's a hard lesson in life. I could afford so much more for myself if I just didn't have any debt.

ItsNotRocketSalad · 16/08/2023 22:44

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….

Agreed. I have credit of around 1/3 my annual salary and that seems more than enough.

lovewoola · 16/08/2023 22:44

I always pay for my holidays & big ticket items on a credit card so currently I have 3.5k on one credit card. Tomorrow it will be zero.

Middleagedmeangirls · 16/08/2023 22:45

My DD left uni with a good degree and debt of £36,000. It's normal. Poor things.