THE younger generation faces a “bleak” future of higher debts and fewer assets than their parents and grandparents, according to official figures from the Insolvency Service which showed more people aged between 25 and 34 turning to Debt Relief Orders (DROs) than any other age group.
One in four people who have taken out DROs since their introduction in April 2009 fall into this age category, as “Generation Y” struggles to get on the property ladder, repay student loans and meet agreed repayment plans on other borrowing.
Some 44,000 DROs, which are aimed at people with modest levels of debt but no realistic prospect of paying it off, have been made in England and Wales since their inception.
The orders allow those with debts of up to £15,000 to write them off, subject to a series of conditions – the borrower must have a disposable income of less than £50 a month, savings and assets worth less than £300 and cannot be a home-owner.
The figures come as debt relief charities launch a Dealing With Your Debt campaign encouraging people in arrears to avoid the potential pitfalls of high-interest “payday” loans and seek help as quickly as possible.
Una Farrell, spokeswoman for the Consumer Credit Counselling Service (CCCS), said the figures offered “a peek into the middle of the century.”
“These figures highlight the difficult financial situation that many young adults are in,” she said. “We’re going to have a range of people approaching old age who have few assets and high debt levels.”
Joanna Elson, chief executive of the Money Advice Trust, said: “Many struggling 25 to 34-year-olds might have expected to be further up the financial ladder by now.
“At the same age their parents would most likely have bought their first home, have a comfortable pension lined up, and be saving for the future. For today’s 25 to 34-year-olds, the picture is much bleaker.”
Ms Elson added that many of those struggling with debt problems will be trapped in the private rental market, where costs have “rapidly” escalated.
She said: “Traditionally when young people have borrowed money it has been with the expectation of a continual rise in earnings over the coming years.
“Young people of today may have borrowed with the same expectations, but the difference is that those expectations have not been realised, leaving many struggling to meet agreed repayment plans.
“At the same time, it is getting more expensive to fill up the car, heat the home and put food on the table.
“The combined effect of all these pressures is that more young people are looking for a different solution to help them back on their feet, and the for some the most suitable option is a Debt Relief Order.”