Figures released by the Credit Services Association (CSA) have shown sharp rise in consumer debts.
According to reports, the total value of unpaid debts has crossed over £58 billion at the end of last year. The initial figure includes unpaid debt value of individual agencies and further total debt value has been calculated after combining unpaid debts of different agencies.
According to initial report released by Credit Service Association, total value of placed debt is £31 billion and further £27 billion debts have purchased by debt buyers. Sara de Tute, president of CSA has concluded that some debts are from new creditors who are working within private sector.
She has further added that cost of unpaid debts for government lies between £7 billion to £8 billion a year. 95 percent of these debts are resides from the department of work and pensions and HMRC.
She also said that there is clear trend for debtors to pay off debts through alternative options or settle the debts wherever it is possible. Government is liberal in debt collection and this clearly indicates that the process is helpful to improve personal balance sheet of debtor in current economic uncertainty.
At the end of December, 2011 total debt owing including the likes of logbook loans etc, the value for collection by CSA members was 32 billion. This figure shows that each UK household has £1000 of uncollected debts.
In second half of 2011, consumer collection by CSA members was £1.2 billion which has quarterly increased and reached at £479 million at the end of fourth quarter. Survey reports also revealed that one in 100 families is using loan sharks.
Several families have also accepted that they are facing financial downturn and unable to manage end meets. According to figures, five percent have taken payday loans, one in five mums are missing meals and one in four use credit card just to manage basic expenses.
Leading Private & Consumer Debt Collection Agency Frontline Collections recently announced they have been refusing to deal with payday loans companies and other such financial service entities who specifically operate within the lower end of the market citing ‘ethical differences’ as their main reason.