Wednesday 28th of October 2009
Mortgage repayments are the highest priority for most households, which could allow unsecured debts to stack up - something individual voluntary arrangements (IVAs) can help with.
The essential outgoing for every homeowner to make each month is their mortgage repayment, according to Barney McCarthy, editor of Your Mortgage magazine.
And 49 per cent of people say their biggest fear is their home being repossessed, research by LV Insurance shows.
But by placing such an emphasis on mortgage repayments, homeowners could be neglecting unsecured debts - such as credit card bills.
And if these borrowings pile up they can cause financial turmoil, or even bankruptcy, for any consumer - a problem that could be prevented by taking out an IVA.
IVAs seek to reduce monthly payments by freezing interest rates and negotiating with creditors so that repayments are based on what a debtor can afford.
This may allow people to continue meeting mortgage payments whilst also chipping away at their unsecured debts.
An IVA could also be a more attractive proposition than bankruptcy because it may allow Britons to retain control of their home.
By Neil Burton
- 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
- IVA answers may provide debt support to struggling families
