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Low earners struggling with debt owe double their annual salary

CCCS research reveals scale of unmanageable debt

Woman using a computer to repay debts

If you’re struggling with debt, get unbiased advice from the CCCS, Citizens Advice or National Debtline

New research from debt charity Consumer Credit Counselling Service (CCCS) reveals worryingly high debt levels amongst consumers on low incomes.

The CCCS found that the average unsecured debt of its clients in the income group earning up to £13,500 a year is £12,870. Once you take actual income levels below £13,500 into account, the unsecured debt-to-income ratio for this group of clients averages 199% of their annual income, meaning that on average they owe double their annual income in unsecured debt.

By contrast, the average unsecured debt for CCCS clients earning between £13,500 and £25,000 is £18,547, averaging 124% of their annual income, while it comes to £28,569 for CCCS clients earning between £25,000 and £50,000, averaging 114% of their annual income.

Rising living costs adding pressure on family finances

Delroy Corinaldi, CCCS external affairs director, commented: ‘Unmanageable debt is a problem across all income groups but those on low incomes are particularly financially vulnerable, often finding it hard to make ends meet let alone deal with unexpected demands on their living costs.’

Which? debt expert Martyn Saville added: ‘Rising fuel and food prices, along with low wage rises and downward pressure on benefit payments, mean that the number of people struggling with unmanageable debt is likely to rise. The Office for Budget Responsibility (OBR) predicts that total personal debt as a share of household incomes is set to rise over the next few years, meaning the situation is likely to get worse.

‘Many consumers are also finding it near-impossible to access affordable credit, leading them to turn to expensive alternatives. If your debts are getting out of hand, speak to a free debt organisation like the CCCS as soon as possible.’

Which? debt and repossession advice

If you’re struggling with debt, read the Which? guide How to deal with debt, including 10 reasons you should never use a commercial debt management company, together with contact details for free debt advice organisations including Citizens Advice, CCCS, National Debtline and Payplan.

For more information if you’re struggling to meet your home repayments, read the Which? guide Repossession and how to avoid it.

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