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One in five Britons with high debt considering bankruptcy

One in five adults in the UK who owe more than GBP10,000 in debt are considering bankruptcy or an individual voluntary arrangement, a rise from 13% when the survey ran in March.

The survey, carried out by debt consultancy firm Thomas Charles, suggests that personal insolvencies are set to rise to around 1.1 million adults across the country. The government’s own figures on insolvencies are due to be published on August 4.

The research also showed an increase in people who have problems paying their debts. In July, 11% say they experience difficulties keeping up with repayments every month compared to 9% in March. One in five adults have unsecured debts of over GBP10,000, while four million adults owe more than GBP5000 on their credit cards.

James Falla, director of Thomas Charles, said: With 8 million adults having unsecured debts of GBP10,000 and over, our research shows an enormous uptake of unsecured borrowing across all areas: credit cards, personal loans, student loans, hire purchase and overdrafts. This puts literally millions on the borderline.

Many banks reporting half year results this week have commented on UK unsecured debt, as impairments for bad debts soar. Several of the biggest banks – including HSBC, HBOS, Barclays and Lloyds TSB – have all reported an increase in charges for defaults, with several of the lenders blaming a change in social attitudes for the surge in bad debts.