Thursday 16th of September 2010
Unsecured debt can be a significant burden at the best of times, but when your repayments carry high rates, it can become much more difficult to get out of the red.
Information on individual voluntary arrangements (IVAs) could, however, offer you a chance to take control of your finances and put an end to your debt problems once and for all.
According to Helen Newton, spokeswoman for the Money Advice Trust, rates on unsecured lending have risen in recent times to try and offset the risk of people defaulting on their credit.
This means if more individuals are finding it hard to pay back what they owe, the price of borrowing must increase so the loan provider can cover its losses.
She comments: "The problem is that the more expensive the repayments are, the harder they are to meet, so it is a bit of a dangerous cycle."
IVA information might, though, offer people a way out of this sequence and help them get their finances back on track.
The measure is available for those in full-time employment who owe over £15,000 to three or more creditors and chips away at your unsecured debt with the help of reduced-rate monthly repayments.
And, unlike bankruptcy, the method of insolvency protects the equity on your family home and doesn't block your path into certain careers.
An IVA is not easy and requires a lot of discipline over a prolonged period of time, but it may just demonstrate to you how important it is to stay on top of your finances in the future.
By Kimberley Parsons
- 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
- Could you avoid Gordon Ramsay's court threat with an IVA?
