People with the lowest incomes saw their indebtedness rise last year (2010), unlike every other income group where indebtedness appears to have slowly, but steadily fallen since 2005, according to ClearDebt’s debt worriers’ data (more than 59,000 records of people in debt).

According to data from CreditAction British household’s unsecured debt peaked in 2008 (£9,663) and has declined since (£8,556) – note that the figure is much higher if you eliminate households that have no unsecured debt. CreditAction’s data is the broad pink line in the chart below (and relates to the right-hand axis).

ClearDebt’s data shows that those seeking our advice who had take home incomes of less than £10,000 (per anum) have consistently had a much higher unsecured debt to income ratio than any of the higher income groups. In fact, it’s bobbed around at just under 300% most of the time, apart from 2009 when the pressure eased a tiny bit – and just for a short while.

The data I’ve used this time includes both unemployed and retired people and in my next blog I’ll look at debt to income by different “occupational” groups. I’ve also, at the suggestion of @Chris_Goulden tried to find external data to add context to ours. I Will continue to try to do this and am happy to have suggestions of sources we might use.

In this case, our data and external data show a marked contrast. CreditAction data shows unsecured debt rising over the period 2005-10 as a whole and peaking in 2008. ClearDebt’s enquirers’ data shows a steady decline in the ratio of debt to income – but with a flatter line in 2008. Average incomes in each band have pretty much flatlined over the period too, so the cause of this declining debt to income ratio certainly isn’t that people are earning more.

My feeling, just based on what we know about other aspects of debtor behaviour, is just that debtors are beginning to realise that letting debt fester doesn’t help anyone and that the “take action early” message is beginning to hit home. For me, this even helps explain why the ratio of debt to income isn’t changing amongst the lowest income groups: They don’t have the option of early action, simply because their debt, which will often be from door-step or short term (pay-day) loan providers is always with them – attached to interest rates that you can’t make headway into if you fall behind.