Are people in debt the poorest in society already?

A look at more than 60, nearly enquiries made to ClearDebt shows that the less you earn, the more you are likely to have debt problems – but that significant debt problems exist at any level of income – even the highest.

Prompted by zero-credit’s latest blog, I decided to take a quick look at ClearDebt’s user data relating to the income of people who ask us for debt help to see if I could back up their assertion that “problem debtors have low income”.

To an extent, ClearDebt’s data does back this up – but it also shows that, whatever you earn, there is still a significant chance that you could wind up owing a lot more than is comfortable.

(Remember, the ClearDebt sample I used is of people who were worried enough about their personal debt to approach us for advice about a Debt Management Plan (DMP) or Individual Voluntary Arrangement (IVA) – so they tend to be more than a little worried about their finances. The sample I used  was 59,793 records – that, I think, is pretty substantial. It also excluded unemployed people – so the proportions of lowest income households are likely to be a little low).

Figures for Household Income in the UK

What I found was that 20% of the people who had come to us for help earned less than £10,000 a year (AFTER income tax and national insurance). Across the UK, 10% of households earn less than £10,000 after deductions – so someone, at this level of income, seems twice as likely to be worried about debt than we would expect.

whatever you earn, there is still a significant chance that you could wind up owing a lot..

People who earn between £10,000 and £20,000 yearly, after tax, are a little more likely to be worried about debt that one would expect.

This is around the level of Britain’s average annual wage – so it looks like you can divide people into two groups – the lowest half (in terms of income) of UK households are more likely to have debt problems than not. The higher earning half are less likely to have debt worries.

But, even the most well off have some debt worries: There is no level where they completely disappear.

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Comments:4

  1. Thanks for sharing your data, Andrew. It goes a long way towards showing that contrary to what is usually published middle income earners are a significant group of debtors. I’d love to see any year on year trend, to check whether say the proportion of those earning around £15-30k has crept up in recent years… If is does in the context of those not seeking debt advice, this would be a prime indicator that personal debt has become very much a middle income problem. And again, thanks for sharing!

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