Comparing the first six months of 2009 to the same period (January to June) 2008, ClearDebt’s analysis of 11,853 indebted individuals in England and Wales showed a massive rise in debt enquiries, particularly the self-employed.
The average unsecured debt has risen by just 4% to £27,072 but lower incomes have meant that the ratio of annual take-home pay to total unsecured debt has risen by 8% - to 172%.
Self employed people with debt problems are in crisis, according to ClearDebt. They have seen their average income decline from £36,000 in 2008 to £32,000 in 2009 and they now have average unsecured debts of £40,078 (£12,851 more than employed people). ClearDebt’s self-employed sample has seen their debt-income ratio rocket by 25% in a year, now owing 219% of their annual take-home income.
Britain’s most prudent debtors are those with children. They have reduced their unsecured debt by 1% between the period’s surveyed: Debtors without children have increased their debt by 7%.
Worryingly, Britain’s youngest debtors (18-24) now represent 17% of people seeking ClearDebt’s help. But, older people (55-64) are the biggest debtors – owing £40,798 and with a debt/income ratio of 250% - 29% higher than 2008.
Commenting on the figures ClearDebt Marketing Director, Andrew Smith, said: “The government should be particularly concerned by our self-employed debt figures. This may show that banks are unwilling to make business loans to these people – who will play a major role in economic recovery. Instead, small entrepreneurs may be keeping their businesses financed through expensive credit card borrowing and personal unsecured loans, whilst seeing their ability to repay plunge. This could be a major accident waiting to happen.”
