UK personal debt stands at £1.4tn

Collective outstanding personal debt in the UK stood at £1.42 trillion at the end of November 2012.

This is according to the latest Credit Action report released today (January 11th), which shows the state of consumer finances. Average household debt – including mortgages – was found to be £53,867 and £165 million was paid out on personal debt during the course of the month.

With 1,607 people made redundant every day between August and October, plenty of individuals in the country will find their budgets are stretched.

The study also found that a property is being repossessed every 16 minutes and four seconds, while someone is being declared insolvent or bankrupt every four minutes and 42 seconds.

Consumers struggling to make ends meet might be better off seeking out a debt solution. An Individual Voluntary Arrangement (IVA) is a legally-binding agreement between a person and their creditors and it consolidates debts into one monthly payment.

Among the benefits associated with an IVA are that it freezes interest and charges on all unsecured debts, writes-off any debt people are unable to repay within the IVA and stops them from having to file for bankruptcy.

However, adults in the UK should think long and hard before signing up for an IVA, as it is a serious financial undertaking and typically lasts for five years.

Citizens Advice Bureaux in England and Wales dealt with more than 8,000 new debt problems during the 12 months to September 2012 and this highlights how people are at least recognising that they need to take action.

John Miles, Gocompare.com's business development director, recently stated that 2013 promises to be a struggle financially for a lot of consumers.

"Without doubt, 2013 will be a tough year for many people as austerity measures continue to bite. Providers constantly review their pricing, so even if you think you're getting a good deal on your financial products at the moment, it is worth shopping around on a regular basis."

By Amy White