Tuesday 28th of July 2009
The number of individuals who are defaulting on their credit card repayments is rising, it has been revealed, which could mean many households may soon turn to individual voluntary arrangement (IVA) support.
With unemployment increasing and many households under even more financial pressure, paying off credit card balances may be pushed on to the backburner as priority monetary commitments such as mortgage and rent take centre stage.
Speaking to the Daily Mail, Peter Sargent, a partner at insolvency specialists Begbies Traynor, said many people do not have savings to fall back on should their financial situation worsen.
"The number defaulting on their credit-card debts is growing and therefore the number of personal insolvencies will grow over the next two years," he claimed.
IVAs are an alternative to going bankrupt. IVAs can freeze the interest on credit card debt and creditors will be instructed to not contact the debtor directly, which could be a relief to Britons concerned about receiving telephone calls and letters from lenders.
Louise Bond, personal finance expert at uSwitch.com, recently voiced concerns that Britons may use old credit cards to cover everyday costs should their household income unexpectedly be hit.
By Mark Waterman
- 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 advice could help 'hard-working Britons' repay debt
