Credit crunch 'could force more people to consider an IVA'
Published On 22 April 2008
The credit crunch could mean more people consider taking out IVAs to manage their debt, an industry expert has said.David Kuo, head of personal finance at Fool.co.uk, said that the recent tightening of lending criteria could push people towards a point where they consider an IVA as a means of gaining control over their finances and debt.
He pointed to a recent study by the Royal Institution of Chartered Surveyors that showed that there will be around 120 repossessions every day this year.
Mr Kuo explained: "To put that into some kind of context, these are the kinds of people who are very vulnerable and will be considering an IVA.
"What they will think is: 'Let's take out an IVA and we'll try and repay our debts', in the hope that over the five year period they will have cleared their debt."
What's more, he said that this option "will work" in some cases. However, Mr Kuo stressed that IVAs are not always the best route.
He explained that in some cases "it is much better for the people to declare bankruptcy in the very beginning".
Recent figures from the Insolvency Service showed that there were 15,659 bankruptcies and 9,188 IVAs in the final quarter of 2007.
