The Bank of England (BoE) has offered a new perspective on the UK’s debt landscape, commonly perceived as being out of control.

Earlier this year, the Financial Services Authority (FSA) reported signs of “growing distress” owing to debt, citing record bankruptcies and repossessions and a personal debt pile that tipped into the trillions of pounds.

However, in its Quarterly Bulletin the BoE makes the case that the majority of people experiencing difficulty with money owed are from lower income groups with unsecured loans.

On the other hand, most consumer debt is tied up in loans secured on property (i.e. mortgages), and people with these loans are generally in control of their borrowing and repayment patterns.

The Bank’s conclusion is that the macroeconomic impact of the so-called debt crisis is actually smaller than might be imagined.

The findings are based on the responses of around 2,000 individuals and also showed that few people saw bankruptcy as a viable way to solve their debt problems.

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