People in debt in the recession are being viewed more sympathetically by banks, industry experts have said.
According to the UK Insolvency Helpline – a network of lawyers and accountants dedicated to providing money advice – banks are lowering interest rates for customers who are struggling to keep up with payments on loans, which shows some success by debt advice agencies in such negotiations.
However, a spokesman for the charity warned that people should be wary of entering into individual voluntary arrangements which are growing in popularity, as they involve strict payback methods and failing to maintain the amount agreed upon could lead to bankruptcy.
He did say that, despite this, “if [people] can’t afford to pay back all of their debt and they have insufficient assets to pay back their debts, their creditors may write off a large proportion of their debt”.
The UK Insolvency Helpline’s comments follow recently released statistics from Credit Action, which revealed that total lending in July had fallen by £0.6 billion, the first net repayment seen in the series.
By Sarah Adie