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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

Consumers `heading for financial meltdown`

29/02/2008

British consumers could be heading towards the worst ever personal finance crisis, according to an industry expert.

As a result of massive overspending and easy access to credit, the amount of people applying for bankruptcy or an Individual Voluntary Arrangement (IVA) could reach record highs during 2008, Fool.co.uk has stated.

A number of consumers are due to change their fixed rate mortgages during the coming months, with many finding lending criteria tightened and higher interest rates than their current deal.

David Kuo, head of personal finance at Fool, said: "While sophisticated economic models are unable to identify the extent of the current credit crisis, consumers can stick to the tried-and-tested model of living below their means. And doing so sooner rather than later will help cushion the blow."

An IVA is an agreement between the debtor and their creditors to pay back a proportion of the debt over a five year period. After that time is up, the debt is classed at written off.

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