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Personal Insolvencies Touch New High In UK.
The first quarter of 2007 is likely to see a spurt in case of personal insolvency in UK. Experts say that the number of people likely to be overwhelmed by their debt is likely to increase this year. This is because of over spending at Christmas.
Personal insolvency case had been observed during he period straight after Christmas. Last year it was high and this year experts predict it could be still more with the two hikes in interest rates during the past year. The figure estimated would be around 30,000 people.
Contributing to the woes of people is higher energy bills and unemployment. Last financial year; Citizen's advice have dealt with more that 1.4 million new debt problems which amounts to an average of 5,300 every working day. With the net lending to individuals passing the 1.3 trillion pound mark, Credit Action, a consumer group believes that one in every ten people are showing signs of financial stress.
Debt Free Direct one of the biggest debt Management firms is forecasting that the number of people opting for IVAS- "Individual voluntary arrangements" is likely to double in two years. IVAS is adopted as a way to escape the stigma of bankruptcy and the banks are frustrated at debt management firms selling this as an easy way out, Around 45,000 people used IVAS as a way to write off a part of their debts. KMPG says that 65,000 people declared bankruptcy last year.
IVAS was introduced to provide entrepreneurs with an alternative to bankruptcy but is being used to settle personal loans, credit card balances and other forms of unsecured loans. Most debt are so enormous that people have no realistic hope of repaying. With an IVA only half or two thirds of the sum owed is repaid. Some firms are using IVA to mislead people saying 75% of their debts could be reduced.
There are many sources of free confidential advice which is Citizens Advice, Consumer credit counseling service and the National Debtline. Citizens could use these rather than getting conned by some non-descript debt management firm.
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