Families in Britain are drowning in debt and face financial ruin after a decade-long binge developing their credit card debts to record levels.
Lenient lending criteria and a huge consumer appetite in the decade leading up to the credit crunch has meant that tens of thousands of British families have developed unprecedented levels of overdrafts, unsecured loans and credit card debts.
But it is now payback time as loans become due in the wake of the deepest post-war recession.
The Bank of England today warned that lenders were writing-off record amounts of credit card debts as thousands of adults across Britain spiral further into debt problems.
In its Financial Stability Report the Bank said that lenders are pushing interest rates even higher in response, as a way of putting people off from borrowing more money.
These findings are also backed up by a separate study from the Insolvency Practitioner’s group R3, which today warned of a looming ‘insolvency crisis’ in the UK.
According to their ComRes survey, a record 146,948 Britons will be made insolvent in England and Wales this year, up 10 per cent on 2009.
Steven Law, president of the R3 Group, said: “We stand on the brink of a personal insolvency crisis that will take years to work through the system.
“We know there are nearly a million people out there who are struggling with their debt.
“While it may be the case that these problems are resolved without help, there is a risk that they might snowball out of control.”
George Osborne’s coalition budget said that Britain is now, by some measures, the most indebted country in the world.