Debt worries for those who fail to tell banks of situation?

People are not telling their banks and building societies about changes to their financial situations, a new study has found, which may lead to debt worries.

Research carried out by Callcredit found 69 per cent of those questioned suffering from economic pressures over the last two years did not inform lending institutions. A total of 38 per cent admitted they struggled to adapt to the limitations placed on them by an alteration in their circumstances. Of those who do confront the change, it takes an average of two months for them to do anything.

Graham Lund, managing director of Callcredit, noted the figures are “extremely worrying”. With 65 per cent of Britons experiencing some type of change to their monetary situation in the past two years, consumers may need to look for debt consolidation plans.

“What’s particularly concerning is the number of people who fail to make their bank aware of sudden changes in their financial situation – and those that do get in touch aren’t always completely honest,” Mr Lund remarked. Individuals have to be aware of the impact of these changes in income, he added.

The specialist remarked lenders should be doing everything possible to help customers realise they need help as soon as possible. Mr Lund observed this is particularly important for “customers approaching the limits of their affordability and [assessing] their ability to repay their debt”.

Ed Bowsher, head of consumer finance at lovemoney.com, recently stated it is “depressing” the amount owed by individuals is higher than what the country produces in a year. He added the recession has changed the mindset of a number of those who are in arrears and he hopes this will lead to less people needing to pursue aggressive repayment options in the future.

Credit Action recently revealed total consumer credit lending to individuals at the end of July 2010 was £217 billion, which means the annual growth rate rose by 0.2 per cent.

Posted by Amy White