Monday 11th of January 2010
Individual voluntary arrangement (IVA) guidance may be required by the more than one million householders who have used credit cards to pay their mortgage or rent.
According to Shelter, plastic has been used by such people to meet their rent and mortgage payments over the past 12 months.
The highest proportion of Britons who use this financial tactic are those in working-class professions, although getting their IVA questions answered could persuade them that relying on credit cards is not ideal.
An IVA can merge all credit card repayments into one more controllable, monthly sum, while it can also freeze the interest rates on such unsecured debt.
Individuals who rely on credit cards to pay their mortgage and rent could face the risk of homelessness this year, Shelter states. An IVA, unlike bankruptcy, could help avoid repossession as long as repayments are kept up with.
Kay Boycott, director of policy and campaigns at Shelter, says: "If people are already struggling to the extent that they fear losing their home, increasing credit card debt cannot be the answer."
Rather than increasing credit card debt, using an IVA to clear plastic balances could improve people’s financial security for the long term.
By Rachel Powell
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- IVAs could prevent the bankruptcy fate of losing a home
