Nearly one in five people struggling with debt owe money to family or friends after borrowing from them to keep up repayments to their creditors, according to the Consumer Credit Counselling Service (CCCS).
The debt charity said 18% of its clients owed £3,530 on average to a friend or family member in 2010. This figure represented more than one sixth of clients’ total average unsecured debt of £22,476, according to the charity.
The average monthly repayment agreed by clients who borrowed from family or friends was £124 – making up one of the five or six debt repayments that the typical person contacting the charity was struggling to meet each month.
The charity started collecting this information in 2008 following anecdotal reports from its debt counsellors of an increase in this type of lending, possibly as a result of restricted credit conditions during the recession. The main problem with informal borrowing in this way is that it can place an enormous strain on friendships and family relationships and should ONLY be thought through very carefully.