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Number of people in debt denial on the rise

Number of people in debt denial on the rise

The financial ombudsman has revealed a rising number of people in the UK are in ‘debt denial’. They are failing to ask for help when they are struggling with mortgage repayments. The ombudsman said it has received a record number of complaints, even though the number of homes being repossessed for failing to make repayments has actually fallen in the last few years.

The ombudsman received 13,659 complaints about mortgages and loans in the last year alone. This is a record high for them, and is up from the 12,845 received in the previous year. Around 40% of the cases the financial ombudsman dealt with involved homeowners who were struggling with their repayments. However, it is believed this 40% is only a small fraction of UK homeowners who have fallen behind with their mortgage repayments. Some homeowners ask for help too late making unrealistic appeals to lenders to extend the payment period or lower repayments.

The Council of Mortgage Lenders (CML) have published figures showing in the first three months of this year, 138,200 mortgages had arrears. This is higher than 2.5% of the total outstanding balance, the lowest it has been for the past 6 years. These figures point towards an increased awareness of the ombudsman with more people getting in touch to place complaints. They are placing more complaints but fewer people are in arrears.

Chief financial ombudsman, Tony Boorman, said; “Mortgages are the most significant purchase most of us will make in our lives, so we understand why people might be reluctant to ask for help and guidance about arrears sooner rather than later.”

He went on to say; “Many of the cases where people face losing their home have been heart-breaking to deal with, but could potentially have been avoided.”. He added lenders could be “more creative” in offering solutions and helping people get back on track with payments.

Debt denial is something we unfortunately witness regularly here at Wilson Field. If you are struggling with mortgage or loan repayments, then please get in touch. We can offer you advice and guidance to the best options for your financial situation. We can also help with assisting you on how to get your payments back on track.

Source: BBC News for Business

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