Pawnbrokers and debt management companies have reported rapid growth as personal debt increase at a rate of £15m an hour. Here are some of the main players.
It is estimated that total UK personal debt currently stands at £1, 237b. Additionally, personal debt is growing at a rate of £1m every four minutes! That equates to an increase of £15m an hour. What's more, one person is falling victim to insolvency every minute, and in the last four years the average age of a bankrupt has dropped from 43 to 41.
These are worrying statistics, but perhaps music to the ears of debt firms that are reporting rapid growth. Recently, pawnbroker Albemarle & Bond
(LSE: AMB)
said its annual profits rose 18% to £6.6m, and it hailed 2006 as another very successful year. It has grown through acquisitions, expansions and an organic increase in demand for its services. These include traditional pawn broking, third-party cheque cashing, payday advances and loans.
Recently floated H&T
(LSE: HAT)
is another pawnbroker that has expanded to cater for increasing demand. It has launched alternative financial products, such as Kwikloan and pre-paid debit cards, in addition to growing its estate of shops. Last month, H&T said it made a profit of £0.4m before tax and exceptional items in the first half of the year. This compares with a loss of £0.5m at the midway stage last year.
Rapid growth has also been in evidence at debt management companies. ClearDebt
(LSE: CLEA)
, which offers advice on Individual Voluntary Arrangements (IVAs), said it issued 82 IVAs between April and June. That compared with 44 IVAs in the previous quarter. Furthermore, ClearDebt expects further growth when Simple IVAs are introduced as they will extend the concept to consumers with lower levels of debt.
Another company involved in IVAs is Debt Free Direct
(LSE: DFD)
. In September the company said August was a record month for new IVA cases -- it handled 607 cases in total. Consequently, it is expecting annual profits to be at least 10% ahead of forecast, with attendant uplift in future years. Elsewhere, Debts.co.uk
(LSE: DETS)
said recent trading has exceeded expectation, and Debtmatters
(LSE: DEBT)
plans to take on additional insolvency practioners to underpin growth.
It appears that firms involved in providing debt solutions, be they IVAs or more traditional pawn broking, are growing as more Britons drown in debt. According to KPMG, the total number of insolvencies this year may top 100,000 or one every minute of the working day. And the situation may get worse before it starts to improve.
The surge in demand for debt solutions is definitely worrying. But remember that pawnbrokers and debt management companies are destinations of last resort, and other solutions also exist. Listen to our Money Talk podcast on less drastic ways to Get Out Of Debt and visit our debt centre.
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