Warnings sounded as consumer borrowing fast approaches 11 year high.

Bank of England figures have prompted various debt charities to warn consumers about over borrowing as credit figures show rapid growth, leaving many at risk. With consequences of piling debt very apparent, it could be a good time for consumers to look at their own debt levels to ensure they are managed properly.

Face paced growth

Back in February unsecured debt growth was revealed to have risen by 10.5% annually, the fastest pace in almost 11 years. Much of the growing debt is linked to the use of credit cards. This followed a period of low interest rates; making consumer borrowing very easy.

Banks in the City of London

The potential problem following this is what could happen to piling debts once interest rates rise? If borrowing continues at this rate some families could see themselves at risk from financial instability.

Unsecured debt can quickly mount if not monitored, leaving many vulnerable to changes in circumstances including:

No repeat mistakes!

Speaking to the national press, the head of Policy at leading debt charity StepChange, Mr Peter Tutton, spoke of the importance of learning from 2008. He told reporters:

Levels of outstanding borrowing are approaching the 2008 peak, and the growth rate of net lending is at its highest since 2005.

Previous experience shows how such increases in the levels of borrowing can leave households over-indebted and vulnerable to sudden changes in circumstances and drops in income that can pitch them into hardship.

Mr Peter Tutton, StepChange, Head of Policy

Lesson for all

Lenders and consumers alike should use the figures as both a warning and a tool. While it may be easy to be worried about the rise in borrowing, it should only be a worry if a borrower's personal debts are becomes hard to manage.

Nobody wants debt to mount and it is in the interest of both parties to keep it manageable. Lenders want to be paid on time and borrowers want to avoid plunging too far into debt. Keeping debt manageable would ensure no third party is required and relationships can remain unharmed.

Ridding tension

In the event that a debt requiring to be chased has created tension between parties, there are ways to ensure both find an agreeable outcome.

Part of the work carried out by debt collection companies like AYOM involves mediation between lender and borrower. Mediating a debt ensures everybody gets their voice heard and an outside arbiter can assist, bringing a conclusion to disputes.

If you are a lender with consumer debts in need of recovery (and could benefit from a mediator) AYOM will do everything we can to not only recover the debt but to do so in a swift, amicable fashion.

To learn more about our mediation services you can visit our mediation services page here or you can call 0800 130 3357 to speak to one of our friendly, experienced team.

Alternatively if you would like to learn more about our other legal and collection services you can check our services page here or fill in our simple call-back form on this page.

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