Rising debt ‘forces banks to write off payments’
Spiraling levels of debt in the UK is forcing high street banks to write off billions of pounds worth of debt payments, as debt-ridden consumers find it increasingly difficult to meet all repayments.
It is thought that banks are set to write off £6.6 billion worth of payments for 2006, representing an unprecedented level of written off payments.
A combination of high interest rates, higher living costs ands council tax is putting strain on affordability levels in the UK, ultimately forcing banks to take action.
In addition, personal insolvency levels are expected to be high as was evidenced last year, when 107,000 cases were recorded. With total consumer debt currently over £1.3 trillion experts predict another year of insolvencies for tens of thousands of individuals.
To date both Lloyds TSB and Barclays have announced significant bad debt write-offs in 2006, £1.24 billion and £1.7 billion respectively. Meanwhile HBOS, Royal Bank of Scotland and HSBC are expected to announce multi-million pound write offs imminently, as a result of defaulting consumers.
It has been predicted that total write-offs for 2007 could exceed £7 billion.
Consumers with outstanding repayments to numerous creditors may wish to tie them up into one monthly payment through a debt consolidation loan.
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