"It was like we were drowning at sea"
A sharp rise in personal debt could cause another financial crash, warns the Bank of England.
Alex Brazier, the Bank’s Financial Stability Director, has warned that credit card debt, car loans and personal credit may lead to another economic crisis.
Total individual debt comes to about £1.5 trillion, which is an average of £28,000 for everyone over 16 in the UK.
Many people use credit when they find themselves struggling financially but this can exacerbate their financial difficulties.
Margaret and her husband, a couple in their sixties living in the north-east, found themselves at risk of poverty when their mortgage left them in negative equity.
After re-mortgaging their house, the recession meant the price of their house was far less than they were expecting, resulting in them owing the bank more money than the property was actually worth.
The house took over a year to sell and eventually sold at a loss. Margaret and her husband had no choice but to declare bankruptcy.
However, they were even unable to afford the legal costs of filing for bankruptcy.
Searching for help, Margaret discovered Turn2us and applied for a grant to cover the costs of the bankruptcy application.
A successful claim saw the couple receive £750, declare bankruptcy, and clear all their debts.
Margaret said Turn2us was a ‘life-saver’. She added: “It was like we were drowning at sea and that was a life-boat.”
If you are struggling with debt, there may be help available to you. Read our Debt information for more details.