UK Debt Facts You Should Know

Debt Solutions

May 03, 2023 ● 5 min

Financial debt is a difficult reality for many people in the UK. Whether it’s credit card debt, student loans, or personal loans, debt can be a significant financial burden for individuals and families. Here are some UK debt facts to help you better understand the issue:

Financial education is an important tool for helping individuals manage debts and finances – this is widely available for free. No one should ever have to pay for debt advice, so be careful with companies asking for payments for simple support. Our post on IVA Companies to Avoid highlights some tell-tale signs of businesses that may be trying to take advantage.
Debt can have serious consequences for individuals and families. It can lead to financial stress, mental health problems, and relationship breakdowns.
Debt can also impact your credit score. If you have a history of missed or late payments, it can make it difficult to access credit in the future.
Personal debt in the UK has been rising for years. According to The Money Charity, the level of personal debt in the UK reached £1,839 billion in February 2023.
There are a variety of debt solutions available in the UK, including debt management plans, individual voluntary arrangements (IVAs), and bankruptcy.
Debt management plans involve working with a debt management company to consolidate debts and create a repayment plan. This can help individuals manage their debt payments and reduce their overall debt load.
IVAs are agreements between you and your creditors. Under an IVA, you would agree to repay a portion of your debts over a set period of time, usually five years. At the end of the IVA, any remaining debts are usually written off. It’s available in England, Wales and Northern Ireland.
There is a solution similar to IVAs, available for those in Scotland – this is called a Trust Deed.
Bankruptcy is a legal process that can help individuals eliminate most of their debts. However, it can have serious consequences for an individual’s credit score and financial future.
Credit card debt is a significant source of personal debt in the UK and the average credit card debt per household in the UK is estimated to be around £2,610 as of January 2023.
Student loan debt in the UK is also a significant issue. According to the Student Loans Company, the total amount of outstanding student loan debt in the UK was £140 billion in 2020.
Debt can also impact your ability to save for the future. If a person is struggling with debt payments, they may not be able to save for a down payment on a house, retirement, or other important financial goals.
Debt advice is available for individuals who are struggling with debt. This can include advice on budgeting, debt solutions, and managing debt payments.
The government introduced a range of measures to support individuals and families during the COVID-19 pandemic, as well as the cost of living crisis. This included mortgage holidays and payment deferrals for some types of debt, however, many of these came to an within the last year and many are still struggling.
Taking steps to manage debt and improve financial literacy can have long-term benefits for individuals, families, and the economy as a whole. By developing good money management skills and seeking help when needed, individuals can take control of their finances and improve their financial future.

Debt is a complex and challenging issue for many people in the UK. However, there is a range of debt solutions available, as well as financial education and support, to help you manage your debt and improve your financial future. By taking steps to reduce debt, manage finances effectively, and seek help when needed, you can take control of your financial lives and work towards a more stable and secure financial future.

Money Advice can be there to help you make those initial steps with free and impartial support – why not get in touch today?