Abacus Daily Debt News

Expert argues for personal debt cap

A cap should be placed on the amount of debt an individual is able to accumulate, according to one expert.

Rowan Capital Management’s head of research Tim Cockreill wrote for the Observer about the extensive problems that can be caused by debt when it gets out of control and said the mortgage market practice of lending based on ability to pay should be rolled out across the credit sector.

"Being in debt can bring huge stress, cause breakdowns and families to break up and, as we know, it’s been at the centre of the financial crisis," he remarked.

However, Defaqto banking specialist David Black said he would be opposed to such a system, claiming credit is necessary in case of emergencies and that it can be "a useful asset" as long as it is treated responsibly.

According to the latest figures from Credit Action, the average household in the UK owes £58,280, including mortgages.

By Chris Trimble