More people ‘set to become insolvent’

The number of people becoming insolvent via IVAs or bankruptcy could rise significantly, an expert on debt has said.

Discussing the issue of Britain’s personal finance problems, Director of the Debt Support Trust Stuart Carmichael said: “It’s always been a problem, for the past ten years it’s been a problem, but over the past maybe five years, it’s escalated to new heights.”

And the situation is more severe than some imagine, he remarked, claiming: “I don’t think we’ve actually seen anywhere near the level of debt problems that we’re going to.”

He reasoned that many people have been “treading water” after getting into trouble such as unemployment, with many managing to keep up repayments on debts such as mortgages for “six to eight months”, but face time running out on them and the future being a bleak one.

Some people, the expert noted, have even been adding to their credit burden when out of work, using credit cards to pay for essential bills.

Such an analysis would suggest there may soon be a large increase in the number of people looking for debt help of various kinds and those taking individual voluntary arrangements may do so because it can help protect against repossession and reduces monthly repayments.

After a period of five years or less, the period of repayments will end and any remaining debt will be written off.

People hoping they will be helped out by a swift economic recovery have been warned Britain’s situation is set to only improve gradually.

Governor of the Bank of England Mervyn King used his Mansion House speech this week to warn there are still approaching “storms” Britain must negotiate first.

Posted by Paul Thacker