thedebtblog.co.uk

The first debt management companies started in the UK in early 1994 because of the alarming debt situation developing at the time. The economy at the time was still recovering from the effects of increased interest rates from the 1980’s and early 1990’s. In the 80’s mortgage and loan repayments rose, because of interest rate rises and so many people found themselves with much less disposable income.

Also, as interest rates were rising very rapidly, at a much higher rate than inflation, it was almost impossible to save any cash in order to buy products. Credit was the main way to make a purchase at the time.

This created the ‘buy now pay later’ environment we know today. This environment also created a vicious circle where people became trapped by debt.

Poor financial understanding and poor financial management resulted in many people being unable to maintain payments to their creditors.

Hence the need for debt management services in the UK since the mid 1990’s.

Today in the UK there are more people than ever looking for advice on repaying their mortgages. Are these the people who borrowed way beyond their financial means?

January and February this year have seen record breaking numbers of people asking for professional debt advice about their mortgages. Recent figures reveal that more and more people are concearned enough to get help with their mortgage arrears - so these are people who already have defaults and arrears, let alone the hundreds and possibly thousands of people who are about to default on their mortgage.

There has been a huge 35 per cent jump in mortgage related debt enquiries in the UK, over January and February 2008 compared to 2007. The good news is that people seem to be learning not to continue spending on credit cards as the credit card related issues fell by 9 per cent.

Of 5.7 million issues dealt with in 2007 almost a third of these enquiries were related to debt; a rather worrying trend. As well as mortgages, the ever increasing energy bills and general household bills are huge contributing factors to the 215,000 new debt related enquires taken this January and February.

The combination of huge increases bills like petrol and diesel prices plus rising housing costs has put additional pressure on day to day finances when they are already stretched to the maximum.

The usual Christmas credit card debt enquiries have fallen by 9 per cent in January and Febraury this year compared to last year, however overdraft enquiries are up 7 per cent on the same time period. So it looks like people are just shifting the debts to other forms of credit, it will be interesting to see the number of debt consolidation loans and general unsecured loans taken out and the number applied for in January, February and when we get to the end of March this year. I bet there are lots of people trying to shift debt to unsecured loans, although the credit crunch has lenders tightening their lending criteria, making it more difficult to get accepted for a new loan.

If you are struggling you should tell whoever you owe the debt to as soon as possible if you’re struggling to make repayments.