Low earners owe 20 percent more than they earn each year
July 18, 2011
It has been revealed in a recent report that people on lower incomes tend to owe around 20 percent more in unsecured debts than they earn each year. This includes debts such as credit cards and loans, with many lower income earners struggling to stay on top of repayments for their debts.
Whilst there are now many people who are struggling with their debts, including some middle earners, it is still the low earners that are having the biggest problems according to the debt charity, the Consumer Credit Counselling Service. Many of these lower earners have become increasingly reliant on credit cards and loans due to the financial climate, which has seen living costs soar, wages being frozen or cut, and bills rising.
The debt charity said that people who were earning less that £13,500 per year tended to owe around 20 percent more on unsecured debts than they earned annually. For example, someone earning £10,000 per year owes around £12,000 in unsecured debt, which is 20 percent more than they earn.
According to the CCCS there are also many people who are earning between £13,500 and £25,000 per years who have contacted the charity because they do not have enough money left each month to deal with their debt repayments, suggesting that the problem is also getting worse amongst those earning slightly more than lower income earners.
The Consumer Credit Counselling Service stated: “Unfortunately, these figures confirm our fears - that troubled times lie ahead for many people in the UK. This pain is going to spread wider and affect many more people than commentators previously assumed.”
Another industry group said: “Many people who scraped through the recession are going to find the next few years even harder.”
MPs want to tackle legal loan sharking
July 9, 2011
In the current difficult financial and economic market a huge number of people have found themselves in dire straits in terms of their finances. With the cost of living rocketing due to soaring petrol costs, spiralling inflation, food price hikes, higher bills, and more, there are many people who have been struggling to make ends meet and many that have had to look at ways to bridge the gap between the amount that they have and the amount that they need.
Whilst some people have managed to turn to friends and family in order to get financial assistance there are some people, such as those with poor credit and low income families, who have turned to legal loan sharks. In fact, with the climate in a bad way loan sharks have been able to use the situation to their advantage by targeting those on low incomes and with bad credit, who they know will not get finance from other lenders.
MPs now want to crack down on these doorstep lenders and loan sharks who, whilst legal, are ripping off people that are already struggling by charging them a fortune in interest. A group of MPs wants to make the issue one that is faced and tackled because the extortionate rates being charged are putting many people in an even worse situation.
One MP said: ‘Ministers from both the Treasury and the Department for Business, Innovation and Skills have agreed with me in the past that the high-cost credit sector is a problem which needs to be addressed, but refuse to intervene in the market. With Moneysupermarket.com reporting a 58% spike in applications for payday loans in just one month, and with all the signs suggesting that high-cost credit is growing exponentially, it’s not good enough just to acknowledge the problem yet do nothing about it.’