The IT Trader

Many middle and upper middle class citizens’ debts have increased since the financial crisis started.  Different debt advice charities acknowledged that the number of inquiries they received have doubled this year regarding debts from average to wealthier citizens.

Thousands of middle class citizens have suffered the impact of the economic downturn and the numbers continue to rise.  Most of these debtors acquire a monthly or an annual five-figure salary.  Among the reports included an IT manager who has a salary of £28,500 and has an unsecured debt amounting to £28,500.  Another one from Sussex have a debt accumulating up to £110,000 from loans and credit cards and he only has an annual income of £40,000.

The consequences brought by the credit crunch, loss of jobs is also a key factor why people are finding themselves in serious debt.  Another factor, specifically rising mortgage payments and price-fall on houses, are why debts and insolvency have risen among the middle class through the course of the year.  A huge proportion of their money have been spent on their homes and improvement for it because of the assumption of a growth in equity which they thought would cover the cost.  Most of the finances that was spent on home improvement also came from unsecured and secured debts.  As a result, with the mortgage crisis causing a drop in house prices, a lot of these homeowners have been overstretched leaving them with underpriced equity with outstanding debts.

Financial institutions see higher earning individuals as the ones who will be able to pay for what they borrowed.  For that reason, they are the ones who have an easy access to loans and credit.  On the other hand, if they are unable to become lenient toward their borrowing and spending, they would simply find themselves at a debt hole.  Serious debt is not exclusive for the middle class, but seeing as a lot of people in the middle class invested a huge sum of their asset to their homes, they are the ones who are feeling it more.

Borrowing credit without giving enough thought has been the major cause of people’s debts and bankruptcy.  Living beyond ones mean can be a financial ticking time bomb for anyone.  The effects of the credit crunch and housing crisis have before now affected a lot of households.  Anybody who is planning to take a hefty loan or mortgage should first assess his current state and anyone who has just taken a mortgage or a loan within the past 15 months should re-evaluate his fiscal capability to avoid any impending liquidation.