Bankruptcy rises as the IVA falls
Bankruptcy is rising and leaving a marked difference between the numbers of people applying for an IVA (Individual Voluntary Arrangement).
Experts predict that rising interest rates could make the gap between the two even wider.
The number of people becoming insolvent has risen by 4.2% in comparison to last year, thus inflating the figures for bankruptcy. IVA figures showed a marked decline.
In numerical terms, 26,956 individuals sought debt advice and opted for bankruptcy as a means of dispersing their debt this year. During 2006, only 16,258 people chose bankruptcy to resolve their debt problems.
Figures show that people opting for an IVA dropped by 10,698 but experts blame this drop on proposals being rejected by banks, rather than consumers losing interest in an IVA and its many benefits. As a result, many have had to turn to bankruptcy as a way to clear debt.
As we head into the cold winter months, it is likely that more and more people will seek debt help to cope with rising fuel bills and increasing interest rates. As a result, the figures for bankruptcy and IVAs will be on the rise once again.
Christmas will also bring along its entourage of debt and the internet will do its best to encourage more people to shop online. This will push many into the red.
It has been estimated that 300 people in the UK become financially insolvent every day. Data uncovered from Verdict, a retail analyst shows that shopping online grew by nearly a third in 2006. As a result, many will be seeking the help of an IVA and bankruptcy advice during the first quarter of 2008 and the seasaw of bankruptcy over an IVA will continue to rise and fall.
