Tuesday 1st of December 2009
Individual voluntary arrangement (IVA) advice could be required by an increasing number of Britons, after the latest Credit Action report reveals that the average household debt stands at £9,120.
When unsecured loans are taken into account this rises to £21,210, a figure which an IVA could help to reduce as these deal with unsecured debts of over £15,000.
An IVA can merge unsecured loan repayments together into one more manageable amount, which could avoid household debt creeping up further.
The Credit Action report also shows that the average consumer debt has risen. At the end of October, each Briton owed around £4,724 on credit cards, unsecured personal loans, overdrafts and motor and retail finance deals.
Some individuals will have debts higher than the average and may be concerned about bankruptcy. According to the findings, a property is repossessed every 11.2 minutes and today (December 1st), 386 people will be declared bankrupt or insolvent.
Bankruptcy is a route that many individuals will want to avoid because of the negative consequences that could result from such court action. Homes can be put at risk and people in certain jobs in the finance sector are no longer allowed to hold these positions.
Being declared bankrupt can also result in basic banking facilities like an overdraft not being available and it will hinder a person’s ability to get credit in the future.
If the agreed repayments are kept up with under an IVA, those in debt can avoid court action. Furthermore, creditors can no longer contact the person they lent to, with all communications having to be done through a negotiator.
The Credit Action figures show that over 230,000 unsolicited phone calls are made to UK consumers every day by personal loan and debt management firms.
By Hayley Jones
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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
- Lack of subprime lending creating need for IVA help, expert suggests
- 'Cautious approach' to debt problems
