Bank of England reports massive debt write-offs

The Bank of England has today reported that between April and June 2010 UK banks and building societies were forced to write-off £3.5 billion of UK consumer debt. This equates to a massive £40 million each and every day during this period as more and more families and individuals face up to the fact they will be unable to repay large chunks of their debt. So what does this mean for the future?

Of the £3.5 billion written off by the UK financial arena, £1.2 billion was from overdrafts, personal loans and hire purchase agreements with £2.1 billion from credit card debt. A relatively small £184 million was the results of bad mortgage debts which may well surprise many people. While there is no shortcut to financial stability if you are mired in debt, there is also no doubt that writing off part or all of your outstanding loans can give you the opportunity to "start again".

However, the more money which the UK financial arena is forced to write-off the tighter the criteria for loans in the future will become. This is something of a double edge sword because writing-off debt does release some pressure for some families in the short term but ultimately there is a cost in the longer term.