25% More Debt Written Off By Banks, Says Debt Solutions Company Debt Relief Orders

Banks have written off a staggering £2.7bn of debt in the last quarter of 2010, almost 25% more than in the previous three months, says debt solutions company Debt Relief Orders.

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(Free-Press-Release.com) January 3, 2012 -- The Bank of England reported that the surge in debt write-offs towards the end of 2010 was mostly unsecured debt from people unable to keep up with payments on their credit cards - 1.18bn up from £740m . However, cancelled mortgage debt is also recorded as making a contribution to the write-off figures, with just over a 20% increase in the figures, taking it to a new level of £163m.

It takes the total of unsecured and secured debt written off by banks in 2010 to £9.71bn.

Surprisingly despite the shocking figures for credit card debt write-off, the level of loan and overdraft defaults has decreased from £959m to £925m. However it can’t be ruled out that considerable numbers of people may have transferred their loans and overdrafts to credit cards, which could give rise to the high figures seen in this area.

Frances Walker, spokeswoman for the Consumer Credit Counselling Service , said: 'We are still seeing a high level of consumers coming in struggling with their debts, but most people have lower levels of debt. The problem is that, at best, we have households with stagnating incomes and rising costs, and at worse, households that have suffered from job losses and higher costs.'

But the situation is only set to get worse in light of the recent budget. Low and middle-income households will have added pressure heaped on them due to changes with income tax bands and tax credits. Families who are already finding it difficult to keep up with payments will see the situation decline even further.

A spokesperson for Debt Relief Orders, said: “The figures reported by the Bank of England don’t surprise me. Our advisers have been talking to record numbers of people over the last year, all of which have been looking for ways to reduce and manage their debt better. Debt solutions like Scottish Trust Deeds and IVAs have risen significantly in popularity as they can help get a significant proportion of unsecured debt written off.”

The Insolvency Service reports that over 135,000 people went bankrupt, or took out an Individual Voluntary Arrangement (IVA) or debt relief order during 2010. This is only set to increase in 2011 as the budget bites and household incomes come under pressure.

“Too many people leave it too long before seeking professional advice about their financial troubles,” said the spokesperson. “More often than not they can be helped long before insolvency looms on the horizon, so we urge everyone to look at how the budget will affect your income in the coming two to three years and come and seek help if you think you might need it. There are many other debt solutions besides IVAs , Trust Deeds and Debt Relief orders . The right advice at the right time could spell the difference between solvency and bankruptcy.”

More information can be found online at http://www.debt-relief-orders.co.uk

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