Thursday 7th of January 2010
One person every 3.72 minutes will be declared insolvent or bankrupt today (January 7th), a new report says, although an individual voluntary arrangement (IVA) could prevent this route of action needing to be taken.
The statistic from Credit Action means that 386 people on average will face insolvency or bankruptcy today as their debts and other financial commitments spiral out of control.
But the consequences of bankruptcy could be concerning to many individuals in debt. People may have to sell their home and could even lose their job if they hold certain positions in the financial services sector.
According to the Credit Action report, a property will be repossessed every 11.2 minutes on average today. However, Britons who are worried about this fate could find an IVA proves to be an alternative answer.
Unsecured debt repayments are merged into a single, monthly one under an IVA, meaning individuals in debt only have to deal with one combined outgoing, rather than panicking about several different ones.
Furthermore, IVAs can freeze the interest rates on unsecured debts, preventing balances from spiralling out of control any more.
The Credit Action findings also show that 1,000 people are turning to some sort of formal debt rescheduling plan every day, which could include IVAs.
Another advantage of an IVA is that every day 230,137 unsolicited telephone calls are made to consumers by personal loan and debt management firms. But an IVA states that lenders should only contact borrowers through the specialist financial negotiator who oversees the repayment plan.
Nationwide recently stated that debt problems are exacerbated when they are spread over a number of credit cards and loans as people may become overwhelmed by what they owe and to whom.
An IVA can merge all these unsecured debt responsibilities into a more controllable monthly repayment.
By Mark Waterman
- 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
- An IVA could clear your debt, allowing you to save for your kids' futures
