Wednesday 23rd of December 2009
A record number of people could become bankrupt in east Lancashire next year, a newspaper reports, although an individual voluntary arrangement (IVA) could prevent this from happening.
Last year, 2,712 people in Lancashire were declared bankrupt or took out an IVA, charity the Debt Advice Foundation tells the Lancashire Telegraph.
While an IVA could allow individuals to keep their homes as long as they keep up with repayments, bankruptcy has a number of serious consequences, such as a reduction in basic bank account facilities - including overdrafts - potential repossession and the borrower having their case announced in the local newspaper.
David Rodger, managing director of Debt Advice Foundation, says: "Being in debt can be extremely isolating and it can feel like there is no way out - but people shouldn’t panic - there are solutions available."
One of these solutions is an IVA, which freezes the interest rate on unsecured debt, allowing people to better get to grips with more controllable repayments.
While an IVA is still a serious route to take, many people could be more confortable with the consequences of this - such as a mark on their credit file - than those of bankruptcy.
An IVA could answer the need for bankruptcy as lenders are reassured they may be more likely to get their money back.
Mr Rodger adds that while many consumers use store and credit cards, this can "lead to worry and regret" in January when the bills arrive.
By Chris King
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- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
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- IVA advice need could rise in 2010
