The overall trend of borrowers paying off their loans, credit cards and other debts is continuing and picking up pace, according to the latest figures which have been released by the Bank of England this week.

It seems like individuals are still paying attention to the lessons learnt form the effects of the credit crunch and recent recession and taking the opportunity, whilst interest rates remain low, to repay as much of the balance of their personal loans and credit card debts as they can, in order to place them in a stronger financial position in the future.

The net amount of consumer borrowing, which includes personal loans, credit cards and overdrafts, actually fell once again throughout the month of August, by around £120 million compared with the previous month.

Apart from borrowers taking control of their own finances and repaying their loans, it has also become more difficult to be accepted for a new loan or other form of credit, as the majority of banks and other loan companies are still very cautious about offering loans to anybody in the current economic conditions.

As borrowers continue to repay their personal loan debts, the total amount of personal debt in the UK is steadily falling and has actually reached the lowest level since February 2008. Although this is a significant achievement, people in the UK still owe a total amount of around £1.43 trillion in unsecured loans, credit and store cards and overdraft facilities.

Although the Bank of England are trying to encourage consumers to spend again and help restore the economy, by keeping interest rates low, it would appear that the British public in general have become more cautious with regard to their finances and are keen to clear loans and other debts and build up a savings emergency fund to see them through any future turbulent times.

Everybody is fairly aware of the fact that a growing number of individuals in the UK are currently struggling with their personal debts on things like personal loans and credit cards and this has led to a huge increase in the number of debt management companies.

Although people who are unable to manage their loan repayments are able to obtain free advice from charities such as the Citizen’s Advice Bureau, Many people will pay a company to manage the payments on their personal loans and other debts.

However, the Office of Fair Trading (OFT) has recently investigated a large number of these debt management firms and has found severe shortcomings in the practices of many firms, in the way they conduct their business and treat their customers.

The concerns have been raised since some individuals, who have approached debt management firms with regard to their loans and other debts, have actually ended up being worse off financially than before they sought the advice and paid the high level of fees.

The OFT has informed 129 different companies that they face the prospect of losing their consumer credit licence unless they make drastic changes to the way they run their business, within the next three months.

The key areas of concern have been: advertising services as being free, when customers a re clearly paying for the firm to handle their loans, lack of competence amongst many of the advisers who are giving debt advice on loans and cards and a general low understanding and awareness of the Financial Ombudsman Service rules for handling complaints.

Ray Watson of the OFT said “People who are heavily indebted, desperate and vulnerable, need advice which makes their problem better, not worse and should not be exploited. Debt management firms must be clear about their charges and the options available to customers.”

Personal debt levels in the UK are becoming a growing concern for both financial experts and consumers alike, as people continue to increase the amount they owe through credit such as personal loans, credit and store cards and overdraft facilities.

The UK Insolvency Helpline has just announced that one of the greatest problems and areas of worry for borrowers is that of outstanding credit card balances, based on the number of calls it receives from consumers relating to loan and card debt problems.

Although there has been a large level of reliance on credit cards amongst certain individuals for several years now, this problem has been exacerbated over the course of the past three years due to the effects of the credit crunch and recession.

Many borrowers have taken out personal loans and credit cards in recent years, which have been well within their financial means, only to find that a change in personal financial circumstances has left them in the situation where they are unable to meet their loan repayments, or pay their credit card bills.

This in turn has led to a greater dependence on credit cards in order to pay for regular household bills and other essentials, which has only exacerbated the problem.

The UK Insolvency Helpline is now calling on the government and loan and card providers to offer a greater level of debt interest relief to those borrowers who are unable to manage their personal loan and credit card repayments.

Richard Sorsky, a spokesman for the UK Insolvency Helpline said “The intention is to use these credit cards and overdrafts for emergencies but unfortunately they are using it more and more for everyday expenses.”

One possible solution for someone who is struggling with unmanageable credit card bills, is to take out a debt consolidation loan, ensuring that they then destroy their credit cards in order to remove further temptation.

The amount of personal debt in the UK on personal loans and credit cards is generally continuing to increase, despite concerns over the future of the economy and interest rate movements. However, many individuals may not fully be aware of the scale of the problem and the stress being caused by loan debt.

A new survey, which has been published by the trade body R3, has revealed that somewhere in the region of 4 in every 10 adults living in the UK are worried about their own level of personal loan and credit card debt.

This figure equates to around 19 million people who are finding it difficult to stay on top of their loan and card repayments every month, or who are concerned that they will face problems in the near future due to things like job losses, for example.

The survey found that those individuals living in the London area are the most concerned, with almost half worried over their personal debts. This is followed by the North East and North West, where the figure is slightly less at 44 per cent.

The greatest debt worry is over credit cards, with 51 per cent of those who were concerned saying that this was their main worry, 32 per cent were worried over their overdraft and around 19 per cent were worried about repaying their personal loans and home owner loans.

Steven Law of R3 said “It is alarming, but not surprising that so many people are worried about their debt. The research shows how debt has become a fact of adult life, starting with a student loan and eventually graduating to a mortgage, credit cards and loans.”

“However, seeing debt as a way of life can lead to years of worries about financial stability. People who feel that they are struggling with personal debt should seek professional advice on managing their household budget early.”

Since the onset of the credit crunch, many individuals in the UK has been unable to access the finance they require through the more traditional route of a personal unsecured loan, due to banks and building societies tightening their lending criteria.

As a result of this, a growing number of people who are desperate for a loan have been turning to more expensive door step lenders and in some cases, illegal loan sharks. It has been estimated that somewhere in the region of 2.5 million people have taken out a loan with doorstep lenders and an additional 200,000 have been forced to use a loan shark.

But now a new government initiative is being launched as a pilot scheme which is designed to supply loans to those individuals who are unable to get a loan through the traditional bank route and save them from using expensive and often illegal loan companies.

The scheme which is called My Home Finance, is being run by the National Housing Federation (NHF) and is starting by opening ten branches around the West Midlands area, with plans to expand on a nationwide basis in the future.

The scheme will offer small loans, comparable with doorstep loan companies, of around £500 each. These will charge an interest rate of 29.9 per cent, increasing to around 49.9 per cent, once the scheme goes on a national basis.

Whilst these rates may seem particularly high for someone who may have access to a cheap loan, they are particularly favourable when compared with the alternatives.

David Orr of the NHF said “By offering fair loans at fair prices, we hope to offer an alternative to both loan sharks, who cynically prey on hard up families and doorstep lenders, who are all too willing ot lend cash to the desperate at hugely inflated rates of interest.”