Writing in his column in the Daily Telegraph, Andrew O’Hagan said that figures showed that the number of families with Individual Voluntary Arrangements (IVAs) had risen from 5,000 in 2002 to 40,000 this year.
“This is the wider issue thrown up by Britain’s addiction to debt,” writes Mr O’Hagan. “We may be turning into a nation of fantasists, where the ideal life, the great happiness, is not to be built steadily in accordance with effort and income and imagination, but instantly accessed via credit mechanisms that are custom-built to turn into traps for the careless.”
His comments come as official figures show that Britons are struggling to cope with debt as bankruptcy cases and the amount of IVAs rise.
Financial experts, including the governor of the Bank of England, are already urging consumers to better manage their debt.
Pondering the future unless Britons become better at debt management, Mr O’Hagan mused: “Are we breeding a future nation of bad debtors, people who can neither create the wealth they splurge nor honour their financial agreements?”
David Mond, CEO of debt resolution company ClearDebt, believes that IVAs might actually be creating a renewed sense of financial responsibility: “People who choose to sort out their debt matters with an Individual Voluntary Arrangement commit to budgeting to repay as much as they can afford, usually over 60 months: At the end of this process you have individuals who have learnt to manage their money – and ought to be better risks for credit than, for example, people who go bankrupt.
“The danger for the banks is that they fail to recognise that today’s IVA debtor may well be tomorrow’s prime customer.”