Tuesday 22nd of September 2009
Personal debt has to be capped so that people cannot take on borrowings that they cannot afford, a claim suggests, a situation which could require the support of individual voluntary arrangement (IVA) advice.
Credit cards and unsecured loans have to be tied to savings, salary and other debt so that Britons are not given more credit than they can handle, Tim Cockreill, head of research at Rowan Capital Management, tells the Guardian.
However, many households have been able to get their hands on credit after credit, and, as such, now find themselves facing significant repayments as they struggle to win the battle against interest.
On obtaining IVA advice, people could be told that undertaking an IVA will freeze the interest on debt and group different creditors into a single, more controllable monthly repayment.
Mr Cockreill says that his idea of capping debt will not prove popular, "as it means less of it, which means less consumption and, crucially, less instant gratification. Persuading people to wait and save before they consume is a tough one, so it needs regulation".
Indeed, clearing debt through an IVA could encourage people to make a fresh start and only spend the money which they have, to avoid falling deep into the red again.
By Mark Waterman
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- 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
- Credit Action: Unsecured debt on the up
