"Figures from Lloyds and Northern Rock showed the number of home repossessions could also continue to rise after an increase in the number of people more than three months behind with mortgage payments. Ed Stansfield, a housing expert at Capital Economics, said a forecast of 360,000 homeowners falling into three months' arrears, made by the Council of Mortgage Lenders, was overly optimistic and that the figure would hit 375,000.
Stuart Thomson, an economist at Ignis Asset Management, said high levels of debt would delay any recovery for several years and warned that deflation remains a greater risk than inflation: "The high level of consumer, corporate, financial and government debt highlights the risk of a prolonged deleveraging cycle over the next few years."
On average, businesses are repaying debt at record levels, but those figures disguise the need of firms badly affected by the crisis for an extension of credit facilities and interim funding.
The FSB warned that "bank mergers, recapitalisation and schemes targeted at the big banks to stimulate lending as a result of the banking crisis risk stifling choices of finance for small firms, leaving business owners with nowhere to turn if they are refused credit by the major high street lenders".
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( 3 / 251 )Despite the recession it has been reported that more people then ever are increasing the amount that they borrow which is leading to an increase in unsecured debt.
"More than a quarter of Britons have increased their borrowings in the past year and 57% owe an average of £6,956 in unsecured debt, according to research by Moneysupermarket.com.
Although the website found 40% of those questioned had reduced their debt, of those who are still in the red 14% believe they will always be so.
Tim Moss, head of loans and debt at Moneysupermarket.com, said: "For those who have seen significant increases in their indebtedness over the last year, I would strongly encourage them to go through their household budget ruthlessly, line by line, and identify where outgoings can be cut.
"Those struggling to make their repayments must avoid the temptation to ignore the problem and should contact their lenders, as well as one of the independent and free debt advice charities such as National Debtline or Citizens Advice."
As the article states, many people are borrowing beyond their means and as such are finding themselves in an ever increasing amount of debt. It is therefore advisable to think carefully before gaining additional credit as you could find yourself in a very difficult situation. For further help have a look at these free guides.
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( 3 / 240 )Debt is at an all time high and with more people facing redundancy it has been reported that credit card debt could increase further.
"The organisation expects £1.5bn of consumer debt across Europe will not be repaid, much of it in Britain which has the highest number of credit card borrowers on the continent.
Analysts say failure to pay credit card bills is likely to increase as unemployment rises and the number of personal insolvencies, which reached 29,774 in the first quarter of the year, continues to rise.
The IMF said the crisis would echo the problems already felt in the United States, where it expects 14 per cent of the country’s £1.16bn credit card debt to go unpaid this year, the Financial Times reported.
The newspaper said National Debtline, the UK charity, had received 41,000 calls in May about loans, credit cards and mortgage arrears – double the number it received in the same month last year.
In the United States, credit card defaults have been rising for months as a sharp rise in unemployment takes its toll on overstretched consumers.
Barclays, Britain’s biggest credit card lender, said in May that overdue payments or defaults had risen in the first three months of this year"
If you wish to avoid credit card debt then the best thing to do is to remove the temptation if you know that you are going to struggle to meet the repayments. For more help see our sections on money saving tips and debt advice.
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( 3 / 242 )Consumer credit in the UK increased by £100m during June, the Bank of England revealed this morning.
The institution also said that remortgages and other debt secured on properties rose by £300m over the month, taking overall credit growth to £400m.
Consumer credit includes credit card and personal loan debts, as well as those derived from other advances.
The Bank of England said that included in the overall net £100m increase was a £200m rise in credit card lending.
However, this was partially cancelled out by a fall of £100m in lending from other loans.
The overall upwards trend suggests that banks and other credit card firms, encouraged by the low Bank of England rate and reports of "green shoots" of recovery from the recession, are becoming more willing to lend to consumers.
When the June results are taken into account, the overall amount owed through consumer credit has risen by 1.9% in the UK over the last 12 months.
Moreover, the three-month annualised growth rate to June 2009 was found to have increased to 0.6%, compared to May 2009's 0.5%.
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( 3 / 264 )University and Higher Education can be an expensive time and for many is just not an option. It is therefore not suprising that many graduates are coming out with a considerable amount of debt and are just too poor to repay this.
"Around 702,000 former students are unable to meet minimum repayments because they are failing to earn enough, it was disclosed.
The number of graduates from England deferring loan payments increased by 160,000 in just a year.
The rise was blamed on a dramatic shortage of decent jobs combined with the effects of the credit crunch.
This information emerged just days after it was disclosed that one in 10 students were unemployed after leaving university last year.
More graduates were also in low paid jobs, such as bar staff, labourers, shelf-stackers, parking attendants and cleaners.
Student leaders warned that debts would grow further following a Government decision to freeze grants and loans in 2010 while imposing an increase in tuition fees. Some universities have called for existing £3,100-a-year fees to more than double"
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