Many more consumers may find themselves considering taking out individual voluntary arrangements (IVAs) if a new report proves accurate in its estimat…
Many more consumers may find themselves considering taking out individual voluntary arrangements (IVA) if a new report proves accurate in its estimates of falling consumer incomes.
The Institute for Fiscal Studies (IFS) has calculated that the average Britons saw a 1.6 per cent drop in income in real terms between 2008 and 2011, in contrast to the normal three-yearly progress that would see their wealth rise by the same amount.
It said this means an annual drop of £360 with average incomes six per cent lower than they would have been had the 2008-11 period been one of normal growth, the IFS explained.
And the future may not be too bright either, with the study suggesting Britons may be worse off in 2013 than they were in 2008, the largest five-year drop in incomes since 1972-77.
Such a fall in wealth may put further pressure on those struggling to make ends meet, such as people in deep debt.
For those owing £15,000 or more, IVAs may be considered as a way of tackling the problem, offering a chance to reduce debts and monthly repayments, protection against the loss of a property and the writing off of any remaining debt at the end of the repayment period, which is not more than five years.
Those who may face new pressures on their borrowing could include those who have borrowed for mortgages and major purchases under the current situation of “exceptionally low” interest rates, property economist at Capital Economics Ed Stansfield has suggested.
Such borrowers may find it hard to meet their payments when the base rate increases, he predicted.
A report by ClearDebt recently compared personal insolvency figures against the number of people claiming jobseeker’s allowance.
By Joe White