* Latest Government statistics underplay growth in IVAs
* Creditors overwhelmed by IVA requests
* Credit card and loan debt has increased sharply to 137% of take home pay…
The Latest government insolvency figures published today (Friday, 5 May) show a 73% rise in personal insolvencies between the first quarter of 2005 and the same period this year. But, IVA provider, ClearDebt, believes the figures for Individual Voluntary Arrangements(IVAs) may be significantly understated, despite their year on year rise of 142%.
Data from the more than 14,000 people who have filled in ClearDebt’s online debt questionnaires show that the average IVA seeker now owes 137% of their annual take home pay (in unsecured loans, excluding any mortgage), compared with 116% in May last year. The average amount owed by debtors is £23,649. Debtors in the North East owe least (£19,4i5), but top the debt/income ratio list – owing 165% of their take-home pay. Debtors in the South West owe most (£26,408).
Men (£26,305) owe substantially more than women (£20,110) both in cash terms and as a percentage of income (Men – 147%, Women – 129%).
Older people also have bigger debt problems than younger, with over 45’s owing 188% of annual income, compared with 105% for under 25’s.
Latest figures from ClearDebt illustrate that the level of credit card and loan debt owed by IVA seekers has risen sharply since May last year.
ClearDebt CEO David Mond commented:
“We think the figures issued by the DTI may significantly underestimate the demand for IVAs, thanks to creditors inability to deal swiftly with the sharp rise in the numbers of people in debt seeking to use this route out of debt. Our experience is that even the largest of banks and credit card companies are having difficulty coping with the rise in debtors seeking an IVA.
“We noticed a significant slowdown in creditor’s ability to respond to IVA proposals as early as February. By late March we had to take the decision to increase the time we gave to creditor organisations to respond to our proposals from 14 to 21 days. As a result, it is likely that there are hundreds or thousands of IVAs in the pipeline, awaiting approval which, ordinarily, would have appeared in the DTI’s statistics”.
