Debt in the UK is more common than you think. It’s estimated that almost 27 million adults in the UK have debts hanging over their heads – that’s more than half. With these kinds of figures in the debt collection world, you realise that you’re not alone. But how much debt is too much?

Estimates claim that around 9 million adults in the UK will owe debts between £2k and £10k, but the more sobering thought is that nearly double this amount of people are thought to owe debts as high as £100k. With the most common type of debt being credit card debt, we take a look at how much debt is too much.

Debt & income

Often you can work out whether you have too much debt by comparing your debts to your income. Debts that are more than 40% of your annual income, for instance, could seem like too much. Working out your debt in comparison to your income can easily dictate how much debt is too much. 

It’s also worth figuring out the differences between what debt you might have – whether it is good, bad, or toxic debt. While all debt isn’t good in the traditional sense of the word, some debts are slightly better than others.

Good debt

This is when a debt has a low or a fixed interest rate, and the original loan was used to get something that increases in value, like a house or a business. Tax-deductible interest also contributes to a ‘good debt’.

Bad debt 

Bad debts are debts that have high or variable interest rates, and the original loan is used to buy things that lose value or simply get used up. Personal loans for things like holidays or high-interest credit card debt are examples of bad debt.

Toxic debt

Payday loans are prime examples of toxic debts, as well as loans that last so long you end up paying much more than the item is worth. Loans that also require collateral, like your car or other valuable items that you can’t afford to lose, can also be labelled as toxic.

Figuring out your debt load

While there is no one rule for debt, we go through some general guidelines in working out your debt and whether your debt is, indeed, too much. 

If you have debts that equal less than 36% of your annual income, this is considered in general as ‘affordable’.

If you have debts that equal between 36% and 42% of your annual income, you’re recommended to try and pay off your debts in a ‘snowball’ method. This means scheduling and paying off your debts from smallest to largest.

If you have debts that are between 43% and 50% of your annual income, then this is considered as too much. In these instances, it’s recommended that you consult a credit counselling agency such as StepChange, National Debtline or Citizens Advice.

If your debt equals over 50% of your annual income, this is considered as high risk. At this point, you may well want to seek legal advice and even consider the benefits of bankruptcy to cover your outstanding debts.

When should you start to worry?

There are many different factors that you have to take into account when considering how much debt is too much. Reports state that the average person in the UK doesn’t begin to worry about their debt until it is at least in excess of £6k. 

It’s also reported that one in six adults would have to owe more than £10k before they start to worry and consider whether that amount of debt is too much. While this varies for different people who might be under different circumstances, it is interesting to note that £10k seems to be when people realise that their debt is too much.


When it comes to deciding how much debt is too much, it varies drastically from person to person. Your income is a key factor in dictating whether you do, legitimately, have debt that is too much, but also personal consideration comes into play as well. 

We go through some of the more frequently asked questions about how much debt is too much.

What happens if I don’t know how much I owe?

You should never hide from your debt, and you should keep careful tabs on what you owe at all times. If you’re purposefully ignoring the debt, you may have more than you think and can’t face up to it. Go through your records and you will find all the information you need.

Should I ignore debt collectors?

No. If you have been contacted by a debt collection agency, this means that the original creditor believes your debt has become untenable, and it is a bit of an escalation. If you ignore them, they may well take legal action against you.

My debts are more than my income – what should I do?

If you have debts that are more than your income, you have too much debt. Being in this much debt can actually spiral out of control, and because you miss payments on some things, you can get further into debt. Take a close look at your monthly spending, and consider what you can do without so you can afford to pay off these bills.

Should I keep on using my credit card?

If you have debts, which is actually very normal, you may wonder what you can do to continue getting your essentials. Using a credit card to purchase things like groceries may seem like a good idea, and an easy way out, but by doing this, you are actually getting yourself into even more debt. Make careful notes about your monthly expenditure on things like groceries and consider where you can make changes and save.

Final considerations

Having debts is something that all of us have experienced. It’s part and parcel of our daily, modern lifestyles, which is unfortunate, but it is something we have learnt to live with. If, however, you are left wondering how much debt is too much, you may well have too much debt. 

If you want to seek more financial advice, you can visit the websites we mentioned earlier in the article, who can give you plenty of handy tips and advice about what to do. Alternatively, you can visit one of the following websites for advice too:

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more
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