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Britons `rush to repay debt`

Consumers in Britain are once again repaying their debts faster than they`re taking on new debt, according to new figures from Unbiased.co.uk.

The website`s `Savings Brake` shows how much we`re borrowing compared with how much we`re saving. The borrowing figure includes unsecured debts and equity release but not mortgages. Sometimes, like now, it can actually be a negative figure, meaning people are repaying more debt than they`re taking on.

In the second quarter of the year, we collectively repaid £1bn more than we borrowed, according to these figures, so we repaid 7p of our debts for every pound saved.

Savings levels did drop, partly because many people have been so keen to repay their debts. In the first quarter of the year, we saved £23bn, but this fell 35% to just £15bn in the second three-month period of 2010.

"Brits appear to have shifted their financial habits to reflect those last seen at the height of the credit crunch, with debt repayment top of the priority list. For the first time since 2008, consumers are now paying off more debt than they`re borrowing - however, this has inevitably also resulted in a drop in savings levels," said Karen Barrett, Chief Executive of unbiased.co.uk.

"It`s good to see people reducing their debt levels," said a spokesperson for the IVA Advisory Centre, "especially at a time like this when there`s so much uncertainty in the economy.

"Carrying debt can be risky as well as expensive - if the borrower`s financial circumstances deteriorate, they may find that debts they were servicing quite comfortably become a real burden. So it almost always makes sense to overpay debts and repay them as quickly as possible.

"But not everyone is in a position to do that. People who find they can`t keep up with their payments should get some expert debt advice before their problems get any worse. They may find that an IVA, debt management plan or other debt solution can help them bring their finances back under control."

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The IVA Advisory Centre is a licensed Insolvency Practice, offering expert debt advice as well as IVAs and a comprehensive range of other debt solutions. If you are in debt and would like to explore your options, contact one of our advisers today.