A total of around £25 billion worth of unsecured personal debt that may not be paid back is currently outstanding in the UK, it has been claimed.
Research by the credit risk management group TDX has shown that there are around one million people in a precarious financial situation and the bulk of the arrears is believed to be accounted for by credit card debt.
As a result of these issues and the ongoing economic downturn, the group has also estimated that there will be almost twice as many people entering an Individual Voluntary Arrangement (IVA) this year than was the case in 2007.
TDX’s analysts concluded that “A slowdown in house prices and an increase in personal inflation, which offsets any relief from interest rate reductions, will lead to an increase in the number of people in financial difficulty.”
Accountancy firm Grant Thornton predicted earlier this year that around 110,000 British consumers would enter an IVA in 2008.