Avoid insolvency in 2008
January 18, 2008
It is at this time of year that many people suddenly realise just what a mess their finances are in, having spent far more than they could actually afford to over the Christmas and New Year period, and having suddenly realised that they are in huge levels of debt that they cannot possible hope to pay back.
As the New Year begins many consumers are watching their letterboxes with worried looks on their faces, just waiting for the dreaded credit or store card bill that will confirm their worse fears with regards to their financial position.
According to a number of recent reports there are many people that will already be deciding whether they should enter into an Individual Voluntary Arrangement or declare themselves bankrupt because of the financial situation that they have found themselves in.
Around a quarter of consumers aged between 16 and 44 are worried about their credit card bills following the festive season, and officials state that it is vital that consumes take action to sort out their finances, with one official stating: “Sorting out your budget isn’t the most interesting thing you will do after Christmas, but it could be the most important. If you don’t make payments on time it can affect your credit history and at worst put your home and even relationships under pressure.”
Worrying the high level of consumer debt in the UK has led many industry officials to believe that the level of personal insolvencies in the UK is set to rocket, and one firm believes that figures are set to rise from 110,000 in 2007 to 130,000 for 2008.
One official stated: “This high average level of debt clearly indicates that too many people have borrowings that they have no realistic hope of repaying. Any excessive spending over Christmas and at the New Year sales, especially where goods are paid for on credit, risks tipping even more consumers over the edge.”
Of course, bankruptcy or entering into an IVA may be the only really effective solutions for some people with high levels of debt, but experts repeatedly remind consumers that these solutions are ones that need to be carefully considered, as they could impact heavily upon your financial future. For those struggling with debt there may be other less damaging solutions available, such as debt management, informal arrangements with creditors, etc. and consumers can find out more about the options available – other than insolvency – by contacting a debt counsellor, a debt charity, or even the Citizen’s Advice Bureau.
Consumers are also being urged to contact their banks if they are struggling with their finances to see what can be done without damaging their finance future.
One industry official stated: “Banks are fully signed up to the enforceable responsible lending practices in the Banking Code. Yes, they want to lend money but they want to do it the right way by lending to people who are going to be able to make the repayments. So, if your bank turns down your request for a loan then think hard before you go and borrow elsewhere.”
- Don’t look upon insolvency or equity as an excuse to get into debt A recent report from the Personal Finance Research Centre has suggested that many people in the UK may be looking upon equity or insolvency opportunities as an excuse to get into high levels of debt,
- Is the insolvency road about to get busier? Over recent years more and more people have been turning to insolvency in order to escape mounting debt that they can never hope to repay. The past couple of years has seen an increase in
- Drop in insolvency numbers A recent report has shown that the number of people that are being declared insolvent in the UK has fallen across England and Wales. The third quarter of the year saw a drop of 3%
- Debt management firms may be able to write off debt As most people are aware the level of personal debt amongst consumers in the UK is very high, and with borrowing costs rising, the cost of living on the up, and increases in a range
- Bankruptcy hell during first few months of the year Some experts have stated that the frivolous spending that many consumers indulged in over the Christmas months will now result in bankruptcy hell over the first few months of this year, with the first three
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