Brits 'looking to get out of debt' in crunch

28/01/2009

Many Britons are using the economic slowdown to get a grip on their debts.

This is the main finding of new analysis from the UK Insolvency Helpline, a financial advice network.

According to an expert at the organisation, banks are also likely to prove amenable to repayment plans from individual debtors.

Ian Boden-Smyth, money advice co-ordinator at the UK Insolvency Helpline, commented: "As long as people are offering a realistic income and expenditure analysis to show that what they're offering to pay back is acceptable, the banks will take it to get their cash flowing again.

"People are looking at this credit crunch period as a time for getting out of debt."

Kevin Still, EuroDebt director, added: "For those in a position to take advantage of reduced mortgage interest payments and use these to accelerate the repayment of the mortgage or pay off other debts then this is very sensible, especially when the return on savings and pensions currently look very unattractive.

"For those already in serious debt, the situation may be different. We saw through 2008 rising fuel and cost of living increases. We are now seeing significant reductions in take home pay and disposable income. Reductions in mortgage payments need to be used in conjunction with your whole household income and expenditure, so that any proposals made to creditors are sustainable and you have some contingency if your circumstances change."

Recent figures from Sainsbury's suggest that spendthrift habits might be a little too entrenched for some, however.

The firm found that 44 per cent of Britons do not expect to clear the debts they built up over Christmas in full by the end of this month.

Tags; Housing Debt and Bills, Credit Card Lifestyle,

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