A charity has warned that levels of personal borrowing in the UK are unsustainably high, and that the effects of the credit crunch will leave many borrowers bankrupt.

Research from the Citizens Advice Bureau shows that people turning to the charity for debt advice owe an average £16,971 through credit cards and personal loans - two thirds more than in 2001 and nearly 18 times their monthly household earnings. It would take 93 years for such customers to pay off their debt at an affordable rate, said the charity.

CAB chief executive David Harper has called the figures “sobering”. Worse still, they are based on information collated before the credit crunch really took hold, when jobs were more stable than they are now.

“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 to take its toll,” Harper added.

One man who came for the charity for help owed £60,000 in credit card debts and mortgage arrears, and was about to have his home repossessed. His only way out of debt was to file for bankruptcy, but he could not even afford the £495 he needed to pay for court fees.

This entry was posted on Thursday, February 26th, 2009 at 11:42 am and is filed under Credit, Credit Cards, Loans, Mortgages. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.