The Financial Blog

The November Chiltern Debt Monitor reveals that over the last month the percentage of wages that debtors can afford to offer creditors has fallen by one per cent to 17 per cent, but the amount they are contractually obliged to pay has remained the same at 67 per cent.
 
Average level of debt: £26,340
Average age of debtor: 43
Yearly gross income: £23,504
Male: 42%
Female: 58% Average number of creditors: 8
Affordable payments as a % of contractual payments: 26%
Monthly living costs: £1,087
Monthly disposable income: £228
No of months to be debt free: 145
 
This means that, without a debt management plan, debtors would be forced to pay £881 towards their unsecured debts leaving just £434 each month for housing, food, travel and clothing costs.

Debtors can actually only afford to offer creditors £228 a month, which is just 26 per cent of their contracted amount.

Chiltern’s Joanne Gill says: “Our research shows that six million people in the UK are struggling with their finances and one million admit to being seriously overstretched; these figures demonstrate that predicament very clearly.

“Debt is a source of constant stress for many families as they juggle their credit commitments to maintain their minimum payments and spiral further into debt. It is particularly pronounced at this time of year as people feel under pressure to enter into the festive spirit whether or not they can afford to.

“But there is a way out for families in this position, an informal debt management plan provides the structure for people to repay their creditors at an affordable level and only after their living expenses have been deducted from their wages.”

Living costs in November were slightly higher than those in October at 83 per cent of income compared to 82 per cent a month earlier.

An informal debt management programme offers a flexible agreement between the creditor and debtor which ensures the creditors get a fair proportion of their debt repaid while the debtor is able to pay their priority bills and for food.

Chiltern makes payments to more than 1300 creditors each month on behalf of its clients and has a broad spectrum of customers ranging from a vicar to a tattooist.

The Chiltern Debt Monitor is a regular analysis of Chiltern Debt Management’s database of live customers to determine the profile of debt and debtors in the UK.

Case Study 1
Age/Sex: 25 year old female
Dependants: 3
Total debt: £44,518
Contractual amount: £1,385
Income: £845 month
Expenditure: £745
Affordable payment: £100
Reason for debt: Split with partner and left with debts accrued during relationship.

Case Study 2
Age/Sex: Couple both aged 36
Dependants: 2
Totaldebt: £16,859
Contractual amount: £1,140
Income: £2,416
Expenditure: £2,236
Affordable payment: £180
Reason for debt: Drop in earnings to look after children, both partners now working.

This entry was posted on Wednesday, November 28th, 2007 at 3:03 pm and is filed under Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.