‘zombie’ debtors

As nearly half the population (45%) struggle to make it to ‘payday’, a payday loan will become a reality for many.

New research by insolvency trade body R3 reveals that 3.5 million adults are considering taking out a payday loan over the next six months.

R3’s research also shows that of those sampled who had taken a payday loan, 60% regret the decision and 48% believe the loan has made their financial situation worse.

Only 13% believe their payday loan had a positive impact on their finances. Frances Coulson, R3 President commented: “Payday loans are not the best way to resolve debt struggles. We know that many who take them out find them to be a negative experience, often escalating financial troubles.”

A new group of ‘zombie’ debtors - who currently pay only the interest charges on their debt and not the debt itself - has also been identified by R3’s research.

One in six individuals are only able to pay the interest on their debt rather than paying off the debt itself. This breaks down into 11% who are only servicing debt on their credit cards, and 9% who are only paying the interest charges on their overdraft.
http://www.r3.org.uk/index.cfm?page=1114&element=14982&refpage=1008