The Citizens Advice Bureau has warned that the typical UK house owner seeking financial help has no realistic hope of paying their debts back in their lifetime.

According to the Bureau people seeking advisors help owe an average of nearly £17,000 which typically would take over 90 years to pay back.

The most common reasons people are giving for being in debt in the first place are: low incomes; over-commitment; job loss; and illness/disability.

Is There An Alternative to Bankruptcy?

In April of this year, a new alternative to bankruptcy will come into practice aimed at people with debts of less than £15,000 but without much excess income or assets belonging to them.

A third of CAB debtors will qualify for this new relief, but CAB are also asking for fair treatment by lenders and creditors, and more government schemes to help those in debt without having to take them to court.

CAB have researched the financial situation of over 1,400 people in England and Wales who visited the charity for help managing their debt in July of last year.

They also carried out similar studies in 2001 and 2004, but say that the most recent figures show that the debt crisis is deepening, as now, on average, clients owe two thirds more than they did in 2001.

On top of this, over half the clients recorded had debts on priority bills, such as mortgage, rent, fuel bills and council tax. One tenth had over 10 credit card debts in the form of personal loans, overdrafts and plastic cards.

How Do We Solve the ‘Root’ of the Debt Problems?

CAB chief executive, David Harker said: “Low income, combined with irresponsible lending, unreasonable debt collection practices and badly-informed financial decisions are at the root of many of our clients’ debt problems.

“For many, there is little prospect of their income increasing or their circumstances changing. The reality is that they are condemned to a lifetime of poverty overshadowed by an inescapable burden of payable debt.”

Added to this, the majority of the clients seeking help were poorer than the average home owner, and job losses across the country since the research was conducted is only adding to people’s problems.

The findings of the work show that the main problems seem to be with housing costs, including things like fuel and water bills, and the growing number of houses with mortgages or secured loan arrears.

Other Research Sings the Same Tune

The Insolvency Service have also released figures showing how badly some companies have been hit by the sudden recession.

These figures show that corporate insolvencies rose by 220% in the final quarter of 2008 compared with the same time in 2007.

However, the number of people declares insolvent was roughly the same in 2008 as it was a year earlier.

What Do You Think?

What do you think about the information in this article? Leave your comments here.