Unsecured household debt set to rise by £1,600 this year

Research by the Trade Union Congress (TUC) has predicted unsecured household debt will rise by an average of 9.4% this year.

This equates to £1,600 per household, the largest annual rise since they started keeping track in 1987.

Unsecured household debt includes loans, credit cards and purchase hire agreements – which let you borrow goods before paying for them in agreed instalments. The research does not include student loans.

The union say their findings “make a mockery” of the UK government’s claims that “their [economic] plan is working”.

They estimate that UK workers are on course for “nearly two decades of lost living standards,” and that real wages won’t recover to their 2008 level until 2026. 

This year, polling by the TUC revealed four in ten people have cut back on essentials like food and energy. And over a quarter said they’d relied on credit to cover unexpected bills.

The analysis comes after recent government stats showed a record number of people in England and Wales took out a debt relief order (DRO) in May. 

Could a DRO be right for me?

If you’re in debt and finding it hard to keep up with repayments, there’s a chance you could be eligible for a DRO – which lets you freeze your debts for 12 months and obliges creditors to stop chasing you.

If your financial situation doesn’t improve in that year, your debts are written off.

A DRO will affect your credit rating for six years and if your situation does improve during the 12-month period, it may end and you’ll need to make arrangements to start repaying your debts.

You may be able to get a DRO if you meet the following criteria:

• you don’t own a home
• you don’t have many valuables
• you don’t have much money left over after covering the essentials

Find out more about whether a DRO might be a suitable solution for you.  

Money help

The cost-of-living crisis has put millions of people in the same boat. If you’re struggling to stay on top of your bills, you’re not the only one.

If you reach out to us, we can help you with budgeting and check what benefits you might be entitled to. We also offer advice on applying for grants.

You can ask us for debt advice online, or give us a ring. We can talk through debt solutions that could be suitable for you. All of our advice is free and impartial. Some debt solutions are also free, while others have a fee.