Friday 5th of February 2010
Individual voluntary arrangements (IVA) could help some households get their finances back on track after many years of relying on credit cards and personal loans.
A recent report from the Bank of England revealed that in December, the amount borrowed on overdrafts, loans and credit cards was more than the amount of debt being paid back, a situation which had not been experienced since June 2009.
But rather than continuing to rely on credit, households may find an IVA answers their concerns about covering costs without the support of plastic or personal loans.
IVAs merge all unsecured debt commitments into a reduced-rate, single, monthly repayment, which could prove to be of assistance for those people juggling a number of balances.
Despite the rise in borrowing, head of consumer finance at lovemoney.com Ed Bowsher stated that many Britons will not go back to their days of heavily splashing cash.
"The whole economic crisis was a huge shock for us and I think people don’t want to make the same mistakes twice," he said.
If the economic downturn has highlighted to some individuals that current levels of spending cannot continue, an IVA may help them think of their finances in a new light by giving them a strict repayment plan to stick to.
By Ashley Littley
- 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
- Former Manchester United footballer Keith Gillespie declared bankrupt
