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Banks write off up to £40 million of debt every day

Alarming amount of debt written off by banks every day in the UK – are we only now beginning to see the true outcome of the credit crunch?

A record breaking £40 million of debt was written off each day by UK banks between April and June this year. The figures, released earlier this month from the Bank of England, highlight the fact that families in the UK continue to struggle with debt repayments. The total figure was a staggering £3.5 billion of debt written off.

£2.1 billion was credit card debt, £1.2 billion was overdraft debt, personal loan debt and hire purchase agreements and £184 million was from mortgages.

Even though economists say the recession is officially over the combination of rising unemployment and the fact that people borrowed too much before the credit crunch hit in 2007 means that we’re only now beginning to see the impact on household and personal finances.

Director of personal insolvency at the accountants RSM Tenon, Mark Sands, said: ‘We are seeing the impact of the downturn really starting to hit now.”

‘It is not necessarily that people have lost their job, but they have lost their overtime, an extra shift or have had a pay cut. They can survive for a while, but suddenly they are tipped over the edge and they cannot cope with their debts.’

Craig Gedey, Marketing Manager at Debt Advisory Line said: “Almost 800,000 people have become unemployed since 2008 and this number continues to rise.

“Even though the Bank of England base rate has been kept at an all time low of just 0.5 per cent since March 2008, lenders continue to increase interest rates charged on loans, credit cards and overdrafts.”

“Anyone who is struggling to keep up with repayments on their debts should get help from a professional debt management company. Debt Advisory Line is the Debt Management Provider of the Year 2008 and 2009. We help people to get out of debt in the shortest possible time, because we know how stressful debt can be. We offer expert debt advice on all debt solutions available to people living in the UK.”