ThinkMoney.com: Fall in Insolvencies May Mask Future Debt Problems
Released
on: August 7, 2008, 7:33 am
Press
Release Author: Melanie Taylor
Industry:
Financial
Press
Release Summary: Despite recent statistics showing a year-on-year
fall in insolvencies, ThinkMoney.com anticipates they may rise
as the slowing economy begins to affect more consumers.
Press
Release Body: Financial solutions company ThinkMoney.com
anticipates a rise in the number of people experiencing
debt problems in the coming months, despite a year-on-year fall
in individual insolvencies.
A
recent report from the Insolvency
Service suggested that the number of people entering
into IVAs in the second quarter of 2008 had fallen to 9,256, down
from 10,561 a year previously – a drop of 12.4%.
At
the same time, bankruptcies had fallen from 16,214 in the second
quarter of 2007 to 15,297 in the second quarter of 2008 –
a fall of 5.7%.
Given
the onset of the credit crunch in recent months, the statistics
may come as a surprise to many. But Melanie Taylor, Head
of Corporate Relations at ThinkMoney.com, said that the
falls in both IVAs and bankruptcies should not be taken as a sign
of long-term recovery. “Most economists are predicting an
economic downturn,” he says, “which certainly doesn’t
raise hopes of the number of people in debt decreasing anytime
soon.”
Other
indicators, such as the Financial Services Authority’s report
that repossessions rose 40% in the first quarter of 2008 compared
with the same time last year, do indicate a sharp rise in the
number of people facing financial difficulties.
Ms
Taylor suggested that this could be an early sign of things to
come. “As things stand, we would expect the number of people
experiencing debt problems to increase fairly significantly, due
to a combination of the credit crunch, rapidly growing costs of
living and rising unemployment.
“These
things take a while to ‘filter through’ to the wider
economy. Typically, lower-income families will be hit first, since
they have less money to spend – but that then hits the companies
where they usually spend money, so their staff are affected too.
Eventually, most people are affected financially in some way.
“This
in turn could lead to increasing numbers of people who can no
longer manage their debts – and it’s essential that
these people get expert help as early as possible.”
But
Ms Taylor was keen to emphasise that both IVAs and bankruptcy
are valid ways of getting out of unmanageable debt. “An
IVA can be a great help to people with over £15,000 of debt,”
he said. “It allows a significant portion of their debts
to be repaid in convenient monthly payments, usually for five
years – after which the remaining debt is written off.”
He
continued: “There is something of a stigma surrounding bankruptcy,
but in the right circumstances it may be the best possible way
of making a fresh start.
“People
who go through bankruptcy are subject to some restrictions –
for example, they are highly unlikely to be able to borrow any
more money for a number of years, and they will most probably
be forced to sell any valuable assets they own. But once the bankruptcy
process is complete, they will be legally debt free, and able
to get on with their lives.”
Think
Money are a financial solutions company based in
Salford Quays, Manchester. The company specialises in a range
of financial services, including mortgages, loans, debt help and
advice (including debt management plans, IVAs, and debt consolidation).
Web
Site: http://www.thinkmoney.com
Contact
Details: Melanie Taylor
0845 056 6480
melanie.taylor@thinkmoney.com
Pennington
House
Carolina Way
South Langworthy Road
Salford Quays
M50 2ZY
2012
