Wednesday 3rd of February 2010
Every 11.2 minutes in the UK a property is repossessed, the latest figures from Credit Action reveal.
Individual voluntary arrangement (IVA) answers could be needed by a growing number of Britons, after the statistics show that being unable to keep up with debt is resulting in many people losing their homes.
But with the average UK adult owing £30,252, including mortgages, it could be easy to see how for many, repayments are an impossible target.
This is highlighted by the fact that such debt is equivalent to 129 per cent of average earnings. An IVA can, however, help some individuals meet their repayments.
IVAs freeze the interest on unsecured debt such as store and credit cards and personal loans.
The interest on debt could place a bigger burden on household coffers than the amount borrowed itself.
According to the Credit Action report, every day Britons fork out a combined £181 million in interest on their personal debt.
IVAs may also help reduce the concerns of those worried about joining the repossession statistics.
Unlike bankruptcy - where a home is often sold to raise money to give to lenders - IVAs can keep a home safe so long as individuals keep up with their new, reduced, monthly repayments.
Households with debts of more than £15,000 could be rocked if one person is made redundant.
Credit Action says that 1,995 people in the UK are made redundant every day. While an IVA cannot be undertaken by someone who is unemployed, the half of a couple with joint unsecured debts who has a job could apply for an IVA.
This could take some of the burden off meeting repayments, a task which may appear to be impossible should a household income significantly drop.
With reduced monthly repayments, IVAs could be ideal for those with emptier coffers who still need to keep up with their financial responsibilities.
By Chris King
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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
- IVA advice may help Britons face up to debt
