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Stuck In Debt: Why Do People Get Trapped In Problem Debt?

Evidence type: Insight i


Levels of household borrowing have been increasing steadily since 2012, outpacing income growth since 2015. The pace of that borrowing has increased since 2016, with the amount of debt growing by over three per cent, or 48 billion pounds, by 2017. Personal debt in the UK is estimated at £1.5 trillion. While the vast majority - £1.3 trillion – is accounted for by mortgage debt, the remaining £200 billion is made up of consumer credit - mainly credit card debt, personal finance and car finance. The ratio of unsecured debt as a proportion of household income is almost as high as it was before the financial crisis, standing at 40% in 2017, compared to a high of 42% in 2008.

The study:

This 2017 report from Citizens Advice focuses on consumer borrowing, presenting new analysis of the extent of long-term problem debt in Great Britain. The report draws on three main sources of information, as well as Citizens Advice client data. The three external sources are:

  1. Wealth and Assets Survey data – This report uses four waves of Wealth and Assets data from between 2006 and 2014. The survey collects longitudinal data, by measuring change in the same people over time. This allows it to track the experience of people in debt and identify those experiencing long-term over-indebtedness.
  2. NMG Survey – The NMG Consulting survey is commissioned annually by the Bank of England and collects information on household finances.
  3. National Opinion Poll – A nationally representative opinion poll was commissioned by Citizens Advice with a number of questions relating to household finances, life events, debt, expenditure and other financial behaviours. Online research was conducted among 2,116 respondents in June 2017.

The internal Citizens Advice data contains extensive insights into the advice provided to its face-to-face debt clients. It includes demographic information, as well as trends and patterns in the advice given. This data is used to supplement the other findings in this report.

In this analysis, people were regarded as struggling with debt if any of the following were true:

  • They were in arrears;
  • They had missed repayments on either a credit or store card;
  • They said meeting debt repayments were a struggle;
  • They found their debts to be a heavy burden.

Key findings:

  • Struggling with debt can be a short-term problem, driven by income shocks or unexpected costs such as replacing major appliances. However, of the two million households who were struggling with debt in 2015, almost half (47%) were still struggling with debt a year later.
  • Perhaps even more concerning was that of the 4.3 million people who were struggling to meet their financial commitments around the time of the financial crisis (2006-2008), 800,000 were still struggling in 2012-14.
  • Two main reasons stood out for people getting stuck in a long-term debt cycle:
    • Credit card users are more likely to remain in problem debt. This is at least partly due to credit cards having no repayment schedule allowing borrowing to continue indefinitely.
      • Almost one-in-five people who were struggling to pay their debts had their credit card limit increased automatically, without them requesting it.
    • People enter a debt cycle. People who are struggling to pay their debts are just as likely as those who are not struggling to borrow more. On average, these people took on an extra £1,506 of debt between 2010-12 and 2012-14.
  • The report finds lone parents are twice as likely to hold unsecured debt when compared to all adults in the survey, with two-thirds (66%) having some form of consumer debt.
  • Couples with children also have more debt than those without (39% compared to 28%).
  • People in work, with a mortgage, or in rented accommodation were also more likely to have unsecured debts.
  • The most common form of unsecured debt is credit cards, with 14% of British adults having some form of credit card debt.


  1. The FCA should ensure credit cards don’t push people into long-term debt by employing a series of measures, including stopping lenders from automatically increasing customer credit limits and requiring lenders to conduct affordability checks.
  2. Lenders should scrap unarranged overdraft fees.
  3. The Government should work with the Money and Pensions Service to provide financial guidance when most needed.
  4. The Government should give more certainty to people struggling with debts by introducing ‘breathing space’ for people struggling with debts, and creating legally backed debt repayment schemes.

Points to consider:

Methodological strengths and limitations:

  • This report and the data analysed are now several years old, and there have been numerous changes in both the economy and the regulatory regime since this publication.


  • This report is of interest to any stakeholders with an interest in persistent long-term over-indebtedness.

Generalisability/ transferability:

  • The results of this research are useful for informing people of the causes and problems of persistent debt, but readers must be aware of possible regulatory changes since the date of publication.

Key info

Year of publication
England, Scotland, Wales
Contact information

Spencer Thompson, Joe Lane, Gwennan Hardy and Andrew Falconer

Citizens Advice