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Cash-strapped UK families increased their levels of personal debt by 48% over the past year, according to a report from a leading insurance firm.

Aviva’s Family Finances report found the average British family currently owes some £7,944 in unsecured borrowing, compared with just £5,360 in January 2011. The increase in debt levels is in spite of the fact that the typical monthly net income of families in the UK rose by 7% to £2,066 over the last year, up from £1,937 in January, 2011.

The Aviva report said rising incomes had failed to keep pace with soaring prices for essential items such as food and fuel, even though the increase in average incomes it reported outstripped the rise in the Consumer Prices Index (CPI) measure of inflation over the past year.

Worryingly, the number of families saving nothing each month rose to a record high of 42% over the past year, according to Aviva’s research. The average amount saved by households that do manage to put something by each month fell slightly from £22 in January 2011 to £21 this year. Despite… Continue To Read This Post..

Some 1.54 million people sought advice from free debt counselling services in 2011, up from 1.4 million the previous year, according to the Money Advice Trust.

A survey carried out on behalf of the debt advice charity by the University of Nottingham suggested that nearly a quarter of the UK adult population is in a “constant struggle” to manage their debts. The study found that some 2.5 million people are in arrears on at least one consumer credit product, household bill or payment.

The report predicts a sharp rise in the number of people seeking free advice about their financial situation as rising inflation, higher levels of unemployment and slow wage growth put pressure on consumers’ incomes.

Joanna Elson OBE, chief executive of the Money Advice Trust, said: “2011 was a tough financial year for many families across the UK; unfortunately more people are likely to struggle in 2012.

“With unemployment rising and wage growth relatively flat, while prices are going up, it’s going to take a greater proportion of household income to heat your home, put food on your… Continue To Read This Post..

The average UK household has unsecured debts equivalent to nearly half of its annual income, according to a new study from Aviva.

A survey by the insurance giant found 52% of UK households have unsecured debt – including loans, credit cards and store cards – and that the average amount owed is £10,604. Average household income in the UK currently stands at £23,796.

The most popular form of unsecured debt was found to be credit cards. Some 43% of UK households owe an average of £5,629 on their plastic, according to the study. 26% of families are an average of £4,723 overdrawn on their current accounts, while 25% owe an average of £8,052 in the form of personal loans.

Indebted families spend £224 or 9% of their income servicing their debt each month.

Aviva’s Family Finances Report also revealed that monthly household incomes have risen by just £46 since January of this year, forcing families to make significant cuts in their spending to offset rocketing inflation.

Although the Consumer Prices Index fell slightly to 5% last month, down from 5.2% in September,… Continue To Read This Post..

We know what you’re thinking — more credit repair. And during the holiday season, no less! What can we say? Credit’s on our mind all the time because the role that credit has in our society is growing every day. people are using credit to decide how much your insurance needs to be, whether or not you’re a worthy applicant for a job, or even whether or not you get to own a cell phone. Sure, you can navigate around these things by choosing jobs that don’t do credit checks, getting a prepaid phone and other workarounds, but everything has a price. It’s so much easier to clean up your credit over time. Even though you might not have great credit in the beginning, time and determination can give you back the things that you truly want.

So, onward and upward, right? Right! Let’s talk about debt validation again, in case you might have missed the earlier notes on this.

Validation of debt is simply where you figure out whether or not the collection agency that’s been breathing down your… Continue To Read This Post..

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The Office of Fair Trading (OFT) has published guidance warning debt collectors not to contact people through social networking sites like Twitter and Facebook in pursuit of payment.

The new rules, which apply to all businesses, engaged in the recovery of consumer credit debts, including banks, law firms and tracing agents as well as traditional debt collectors, are designed to stop embarrassing information about people’s debt problems being made public online.

Any messages left on by debt collectors on people’s social networking profiles can be seen by their contacts and in some cases, anybody who searches for their account through a search engine. Debt collection agencies are increasingly using the internet as a tool to track down and contact people.

The move was prompted after debtors who had been contacted by debt collection agencies contacted the OFT to complain about the practice.

Debt collectors have also been warned not to contact people in hospital.

More generally, the guidance:

Warns against misuse of continuous payment authority to recover debts, such as making recurring attempts to recover a single repayment.

Highlights the

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