Bad consumer debt equals £1,000 for everybody in UK

Unpaid consumer debt in the UK has soared to £58 billion – up £6bn in just six months – a new report has revealed.

The figures from the Credit Services Association (CSA) reveal that £31.2bn was passed to debt collection agencies, with a further £27bn sold to debt buyers.

The research shows there are a total of 32 million debts awaiting collection by members of the CSA, the national association for the UK debt collection industry.

This equates to at least one significant debt for every UK household, or £1,000 of uncollected money owed by every person in the country.

The figures show the full extent of outstanding consumer debt passed to debt collection agencies or sold to debt buyers.

Six months ago, the total value of unpaid consumer debt stood at £51.875bn, across more than 28 million cases. CSA president Sara de Tute said that both the volume and the value of debts were rising, attributing this to a range of factors.

She said: “The economic environment has undoubtedly become more difficult and so it is no surprise that debts are rising.

“But there are also other reasons, including ‘new’ creditors within the private sector and parts of national government who no longer see an issue with outsourcing debt for collection to professional and highly regulated agencies capable of recovering monies vital to the public purse.

“The government has gone on record recently… as reporting that overdue debts cost it between £7bn and £8bn, 95 per cent of which resides with the Department for Work and Pensions and HMRC, and part of this has now been passed to our members for collection.”

She said that despite the vast sums of money involved, this was far from being a “boom time” for the industry.

Joanna Elson, chief executive of the Money Advice Trust, said: “These figures make it clear that individuals across the UK owe a huge amount of money that they are struggling to repay.

“The sharp rise over the last six months is likely to be a result of household budgets being squeezed and credit repayments falling by the wayside.

“We have seen just this week that the UK economy has returned to technical recession, but the reality for many people is that the recession never really went away at all.”