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Personal debt soars to £17k per head

Personal debt in the UK has soared to almost £17,000 per head in some cases, new figures show, as Britons continue to borrow more than they can ever afford to pay back.

Research by the Citizens Advice Bureau (CAB) not only highlights the extent of the country’s problem with personal debt, but could encourage those looking to dispose of an endowment policy to think about offloading their investment in the near future.

Statistics from the bureau reveal that 45 per cent of homeowners who have sought debt advice now have secured loans or mortgage arrears – in contrast to less than a third five years ago – while one in three individuals spend at least half their income repaying their home loan.

While many of those looking to pay off some of their debt by disposing of an underperforming endowment policy may already know they have the option to surrender their endowment, some may not have been informed that they can sell it instead.

A representative at aap, the UK’s biggest endowment policy buying firm, recently confirmed that if the company makes an offer for a policy, they will always pay more than the surrender value.

The UK’s personal debt problem has been exacerbated by “irresponsible lending” and “badly informed financial decisions”, according to David Harker, chief executive of the CAB, which could lead to a rise in individuals offloading their unwanted endowment policies.

He commented: “These findings make sobering reading, especially as they are based on data collected just before the worst of the credit crunch began to bite.

“Since then we have seen an enormous rise in the number of people turning to us for help because they have lost their job, so we can expect to see many more people struggling with severe debt problems as

the recession continues.”

Statistics from the payment industry association APACS published earlier this year revealed that UK consumers spent more than £32.3 billion on plastic cards in the run up to Christmas.