Related Articles:
IVA : Is The Debt Crisis Over ?
It is no secret that the personal debt mountain facing U.K. consumers has become the topic of much conversation during 2006. With a meteoric rise in the number of people applying for Individual Voluntary Arrangements (IVAs) ringing the loudest alarm bells within the banking industry.
In this article taken from “UK Personal Loan Store” Alisdair Milton examines whether the debt crisis is now under control.
‘Over the past year many have expressed grave concern over the rising level of consumer debt in the UK, with many households and individuals struggling with high levels of debt, and record number of Bankruptcy and Individual Voluntary Arrangement (IVA) applications being filed. However, some think that in 2007 the crisis may start to ease, as figures seem to indicate that consumers in the UK have finally gained a tighter reign over their finances, and are getting their financial situations under control.
Easy access to loans and credit cards over recent years has seen many people take on more debt than they could manage, and ending up in a huge amount of debt. However, an insolvency expert at Pricewaterhouse Coopers stated: “I’m not sure it is a crisis. The bare figures look dreadful, but I think essentially the worse is over. There will probably be a hangover in 2007 but unless consumers start hitting their credit cards again I do not see it increasing significantly.”
However, not everyone agrees with this prediction. The director of the Debt Advice Bureau stated: “The simple fact is the amount people are spending and borrowing is growing faster than their incomes - it is a simple mathematical equation. People will still continue to overspend. County Court Judgements will continue to rise, bankruptcies and IVAs will continue to rise, repossessions will continue to rise. We will still have increasing number of people in debt even if nothing nasty happens. If something nasty does happen, all bets are off.”
A KPMG spokesperson added: “Is it a crisis? I would say it is - it certainly is for those involved. But the problem has been building up. This year was not a shock. Credit has been widely available, banks and consumers have not been acting responsibly. This year the problem became more visible. The problem is out in the open and people are talking about it more. It is almost like an alcoholic admitting he has a problem - part of the solution is admitting you have a problem.”