The UK is one of the places in Europe where debts within the middle class have increased since the global recession took effect. Reports from debt advice charities from different UK counties acknowledged that the number of inquiries they received have doubled this year regarding debts from average to wealthier citizens.
Thousands of middle class citizens have suffered the impact of the
credit crunch and the numbers keep on rising. A large amount of these debtors have salaries amounting to five-figures. One example is an IT manager who has a salary of £28,500 and has an unsecured debt amounting to £28,500. Another one from Sussex have a debt accumulating up to £110,000 from
loans and
credit cards and his income of £40,000 annually will not be sufficient enough to cover for it.
The consequences brought by the
credit crunch, job losses also brought a big weight why people are finding themselves in deep debt. Another factor, specifically rising mortgage payments and price-fall on houses, are why debts and insolvency have risen among the middle class through the course of the year. A lot of their assets have been spent on their homes and improvement for it because of the expected equity growth which they thought would compensate for everything. Most of the money that was spent on home improvement also came from unsecured and secured debts. Therefore, with the mortgage crisis causing a drop in house prices, a lot of these homeowners have been overstretched leaving them with underpriced equity with outstanding debts.
Higher earners are viewed by banks and lenders as the ones who will be able to pay for what they borrowed. For that reason, they are the ones who are easily granted with
loans and credit. On the other hand, if they are unable to become lenient toward their borrowing and spending, they would easily find themselves at a debt hole. Debt does not discriminate the middle class, but since a lot of people in the middle class invested a huge sum of their asset to their homes, a majority of them was placed in a tough position.
The lack of discipline in borrowing easy
credit has been the main cause of people’s debts and bankruptcy. Living an unsustainable lifestyle can easily lead to debt. The effects of the
credit crunch and housing crisis have before now taken its toll to a lot of people. Anybody who is planning to obtain a hefty loan or mortgage should first assess his present situation and anyone who has just taken a mortgage or a loan within the past 15 months should re-evaluate his financial capability to prevent any potential bankruptcy.
We are now coming to the end of the second year of the
credit crunch and the end is still nowhere in sight. This is quite a sobering thought when you add to it the impact that it has had not only on the
finance industry but on the whole of the UK’s economy. It is to be hoped that the financial institutions whose lack of foresight is responsible for mess we are in have learned their lessons from this, and will not make the same mistakes moving forward.
Other Articles of Tom Dawson
Debt consolidation is quite often frowned upon by those who have never been in the situation to need one However the fact remains that taking advantage of one when your finances are too much to handle can offer a great deal of relief both financially and also psychologically
(May 17, 2012)
Debt consolidation can have a significant impact on your monthly disposable income, and help to relieve the stress and worry of not knowing how you are going to repay all your monthly commitments The following article will explain in detail exactly what debt consolidation is and what the benefits are compared to alternative debt solutions
(May 13, 2012)
There have been fewer lenders in the secured loans market since the credit crunch took hold of the world economy, which has made it more difficult for people to find the money they need when they need The purpose of this article is to give people the information they need to help them get the best deal that they can in these difficult times
(May 11, 2012)
There are a significant number of people that are affected by a less than perfect credit rating; this can cause significant problems when trying to arrange finance at competitive interest rates Not only does a bad credit rating have an impact on your ability to arrange finance it can also affect your chances of getting a job in some cases
(May 10, 2012)
Carrying out some home improvements to your home not only increase the functionality and usability of your home, if the right improvements are carried out then you can also add value to your home For this reason it is important that you are aware of which improvements add the most value to make sure you are getting the biggest bang for your buck
(May 09, 2012)
Is your credit report full of country court judgments due to unpaid credit card bills If you answered yes, you must be worried about your future prospects of obtaining new lines of credit or finance
(May 09, 2012)
Many people all across the globe are finding it hard to pay their way and keep their heads above water, as a result of the global credit crunch Not to mention the current problems in the oil producing countries that is pushing the price of fuel through the roof
(May 09, 2012)
Low rate loans can be a great way to save money when a wanted item is bought or refinanced They make sense because it stands to reason that if one pays a lesser amount for financing, then that person leaves more of their money that can be put aside for other uses
(May 09, 2012)
At first glance and without fully understanding how payday loans differ from all other monthly instalment type loans, they appear to be far more expensive However when you compare the overall cost of taking out a payday loan to the overall cost of a regular multiple monthly repayment loan they are actually cheaper
(May 06, 2012)
Most of us at one time or another will encounter a short-term financial situation that needs the injection of some cash to resolve Previously we would probably have got hold of our bank to overcome the problem
(May 03, 2012)
