Debt Explosion

Debt Levels Spiral

The level of personal debt in the United Kingdom continues to spiral.According to the Council of Mortgage Lenders (CML) the number of house repossessions has risen from 4,620 to 8,140 in the last year. This amounts to a massive 76 percent increase over the period.Spending has continued apace and many people have been forced to take out vast mortgages in order to get on to the housing ladder. This combined with spending on credit cards, loans and huge increases in energy bills has led to repossession levels not seen since the nineteen nineties.

Record Bankruptcies/IVA’s

There has also been a massive rise in Bankruptcies and Insolvencies. Individual Voluntary Arrangements have nenver been so high. The number of people in England and Wales alone choosing to take the IVA route as an alternative to Bankruptcy has increased by 153 percent to 11,105 so far this year . This number excludes those in Scotland and Northern Ireland.Whilst an IVA is often the preferred alternative to Bankruptcy, the majority of people fail to fully understand the full impact and potential repercussions that this can have.
This creates a worrying scenario which provides evidence of the increasing financial pressure being placed on many home owners.

Interest Rates

The recent increase in interest rates has caught many by surprise and looks set to pile further pressure on personal finances. The Bank of England has increased the base rate from 4.5% to 4.75% and whilst it is hoped rates will not exceed this figure, we could see yet a further increase in the not too distant future.

What Now?

Should household costs and spending growth continue at their current rate we will continue to see further increases in personal debt. This will unfortuantely lead to many people facing the most fearful event they can imagine – losing their homes and having nowhere to live.Our advice is not to bury your head in the sand. Although many do take this approach this is not the answer. If you do you could lose everything. Take sound advice from your financial advisor or your bank manager. Alternatively speak to the Citizens Advice Bureaux for assistance.You can also receive professional help with your housing problems. Quite often this will not only help in solving your financial problems but also by enabling you to remain in your home as well.

Most of all Act Now – You do have an opportunity to address these issues. Remember these problems will not just go away. With professional help and planning you can find solutions to help you.

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