Tuesday 9th of February 2010
While many people may get their questions on individual voluntary arrangements (IVAs) answered in order to avoid bankruptcy, many borrowers may continue to spend what they don’t have by believing that bankruptcy provides them with a safety net.
Al Elliott, co-owner of the Homeowners Advice Centre, says Britons who know they are in serious debt and are trying to repay what they owe should be offered more protection from repossession.
Repaying debts of more than £15,000 which are owed to a number of creditors through an IVA can help to prevent a home being repossessed so long as repayments are kept up with.
But Mr Elliot says: "There are increasing numbers of reckless borrowers who rack up substantial unsecured debts, seemingly secure in the knowledge that bankruptcy would discharge them from their obligations."
Such borrowers may not be aware of the negative consequences that can come from being declared bankrupt, many of which can be avoided if debts are repaid through an IVA.
Bankruptcy can prevent people from working in careers such as accountancy, while a home may be repossessed in order to raise money to give back to lenders.
By Kim Parsons
- 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 help could protect families for the future
