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Consultation on debt management launched Govt aid for those struggling with mortgages `too late for some` Pensions `no problem` for IVAs UK reaping what it has sown in terms of personal debt, expert claims Struggling consumers `likely to default on TV subscriptions` Consumers `struggling to cope with mounting debt` Bankruptcy increases by 7% `More Brits applying for personal loans` 70% of Brits `without unsecured loans` Pre-paid cards `more popular as debt rises` IVAs `a real alternative` to bankruptcy Brits `trying to escape credit crunch` by moving abroad West Sussex consumers suffering debt IVA agreements increase Industry body welcomes IVA mailing probe OFT to target bogus IVA companies IVAs can be "helpful" for large debts IVAs - consumers warned about bogus deals Insolvency rates rising IVAs can be "better option" than bankruptcy

IVAs and bankruptcies `on the rise`

13/03/2007

Alliance & Leicester has said that more consumers are opting for IVAs in an attempt to gain control over their personal finances; the number of bankruptcies has also increased.

Research by the company shows that consumers are making their debts worse by signing up to high-interest store cards to pay for their Christmas shopping.

"Statistics show that more people are taking out IVAs and more people are going bankrupt, said Steve Gracey, spokesperson for Alliance & Leicester.

"What people should remember is that it is okay to have manageable debt and people have got to be sensible about it. If they don`t borrow in a sensible way they could get into financial difficulty."

A quarter of debt-related issues tackled by Citizens Advice arise because consumers are unable to make payments on store and credit cards.

Debt consolidation `could prove more costly`

Taking out an unsecured personal loan to clear existing debts may not be a good idea, a spokesperson for the Citizens Advice Bureau has warned.

According to Moira Haynes, a debt consolidation loan could mean that debtors accrue a greater amount of debt because of the lengthy repayment plan.

Ms Haynes said: "We would advise people who are thinking about consolidating their debts to get advice and look very carefully at whether it`s actually going to solve their problem.

"It may mean that they are actually paying out a smaller monthly amount but in the end they will be racking up more debts and it`ll be with them for a much longer time."

Many personal loan providers often promote the idea of consolidation as a way of selling more products to people who are already in debt.

However, Alliance & Leicester has said that taking out a loan to pay off outstanding balances has the advantage of fixed monthly payments and a precise `end date` for the debt.

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