Debt doomsday warning

James Falla, director of debt advice firm Thomas Charles, said that unless something changes soon, there will reach a point where those who have financial problems surpass those who are making repayments.

“We are currently witnessing a correlation of increased borrowing alongside a massive decrease in the number of people coping with their debts,” Mr Falla told This is Money.

“If action is not taken to curb borrowing trends in the UK, the situation is likely to spiral over the coming years.”

According to his figures, the amount of people with regular problems repaying debt soared by nine per cent in the past six months to 2.5 million.

Unless these people and others approaching financial difficulties put in place some form of debt management plan, there is likely to be a ‘debt doomsday’.

Already the firm’s figures show that 1.4 million consumers owe over £10,000 and are ‘quite likely’, ‘likely’ or ‘certain’ to declare themselves bankrupt or take out an Individual Voluntary Arrangement (IVA) soon, an increase by four per cent on last year.