Debt consolidation having positive impact?

Britons may be getting slightly more to grips with their debts, new data from the Bank of England has indicated.

The latest Trends in Lending report – covering the third quarter of 2011 – suggested the wave of insolvency and consequent debt write-off may be on the wane.

It noted that the level of debt write-off was down slightly during the three-month period, while the tally of personal insolvencies in England and Wales "fell slightly".

"Some major UK lenders reported that these indicators had been slightly lower than initially anticipated," the report added, noting that many lenders expect this situation to remain "stable" in the next few months.

Those who do have major debt problems – such as arrears of over £15,000 that they cannot afford to pay back- may wish to seek an individual voluntary arrangement as a means of getting on top of their debts.

It would ensure monthly payments are lower and, provided these are maintained, everything left would be written off after five years.

One reason there may be fewer insolvencies is that consumers are piling up less credit card debt.

The Bank's report stated: "The annual rate of growth of consumer credit remained low
compared with the period prior to the financial crisis," describing credit card lending as "weak".

People seeking to get on top of their debts may find it is wise to concentrate first and foremost on the most expensive.

This was the tip recently given by director at Ark Financial Planning Phil Perry, who also advised consumers to cut down on non-essential spending to help free up cash to reduce debt.

By James Francis