A third of the lowest income households in the UK, loans and credit card debts exceed the assets they hold, found the research.
This debt can be to repay a problem, even if the amount is borrowed amount is relatively low.
The Institute for Fiscal Studies (IFS) analysed official figures to estimate the scale of unmanageable debt.
Unsecured borrowing such as loans, overdrafts and credit cards increased by almost 10% per year in the UK.
The IFS notes that a quarter of the very poor households have high debt, payments, or behind on bills or repayment.
Helen Barnard from the Joseph Rowntree Foundation, said in the order of the report: “The government, regulators and lenders don’t have to lead alone on the improvement of access to affordable credit, but also the financial pressure that families take on to get debt in order.”
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The report found that about half of UK households have some unsecured debt.
Around 43% of loans from banks and other financial institutions, with credit and store card debt (25%) and hire purchase debt (21%) are the other major contributors.
The majority of this debt could be repaid, the report found.
“More than 60% of the unsecured debt is in the hands of households with above-average incomes, and more than half of the households with unsecured debts more than enough financial assets to pay you,” it said.
The problems arose, it was said, for the households already in default on debt repayment, or spent a large part of their income on servicing the debt.
The report suggested:
Young adults who were aged in their 20s likely to be in households with problem debt than older people
Low-educated young adults were particularly fight likely to
Debt problems are more persistent for households with low income
“Debt looks like a real problem for a significant minority of low-income people to keep up with bills and, or, spending a high proportion of their disposable income for debt repayment,” said the author of the IFS report, David Sturrock.
“The Headline numbers are no guide to the extent of the problem of debt. The distinction between debts that are entirely appropriate and those that the view is unmanageable.”