LONDON: Divorcees suffer the UK’s highest debt burden, a study showed on Monday. Divorced people rely more heavily on credit cards and personal loans, according to Alliance & Leicester’s (A&L) latest borrowing monitor.
And they pay a higher proportion of their incomes servicing their debt than any other group, due to having typically lower earnings.
Divorcees have an average of 4,984 pounds-worth of unsecured debt— equivalent to 28 per cent of their annual income.
That is higher than the debt levels raked up by married, single or separated people relative to income.
Married people owe an average 2,600 pounds each, or 5,245 pounds per couple, the study revealed. They also tend to earn more, so owe less than a sixth (15.9 percent) of their annual income.
Single people owe 5,299 pounds, but half of that is student debt and is, therefore, very cheap to finance.
Those who are separated, meanwhile, are in debt to the tune of an average 6,262 pounds; although this is 25 per cent more than divorcees, they also earn more, so pay just 4 per cent of their income in interest payments, compared to 4.2 per cent among divorcees.
Single and separated people also tend to be younger than divorcees (separated couples are, on average, 14 years younger than the typical 54-year-old divorcee), so have more time to repay their borrowings.
Chris Rhodes, managing director of retail banking at A&L, said: “Splitting up clearly gives rise to a lot of costs, including setting up a new home.
“This is reflected in the fact that the recently separated have the highest overall level of debt.
“However, over the years, divorced people’s finances do not seem to improve — showing how long-lived the effects of relationship breakdown can be.”
Divorcees were also found to have fewer assets. Nearly half (44 per cent) have no savings, compared to 27 per cent of married couples and a national average of 32 per cent.
In addition, fewer divorcees own their own homes, suggesting that a large proportion of them fail to get back on to the housing ladder following the break-up.—Reuters
