Pounds 600m to Be Written off as UK's Debt Crisis Grows ; CITY BRIEFING

By Padgham, Jane | The Evening Standard (London, England), January 2, 2006 | Go to article overview
Save to active project

Pounds 600m to Be Written off as UK's Debt Crisis Grows ; CITY BRIEFING


Padgham, Jane, The Evening Standard (London, England)


THE scale of Britain's consumer debt crisis was laid bare today by figures showing a 75% leap in individual voluntary arrangements to deal with debts last year.

But hopes that the hangover from the recent borrowing binge has peaked were boosted by signs that people are starting to rein in reckless spending and save instead.

Accountants KPMG said more than 16,000 people used an IVA - where debtors put together a repayment plan with their creditors - to clear a portion of their debts in 2005. That compares with an estimated 45,000 who were declared bankrupt.

IVAs have become increasingly popular in recent years as creditors believe they offer a greater chance of recouping their money than bankruptcies. But analysis by KPMG shows the average IVA debtor owes Pounds 60,000 and creditors are expected to get only 38% of this sum. That means at least Pounds 600 million will have to be written off.

The surge in IVAs comes after a long-running borrowing binge with millions racking up debts they could not afford to repay.

Britain's household debt mountain topped Pounds 1 trillion last summer - and is still growing.

Steve Treharne, head of personal insolvency at KPMG, said: " Typically the sorts of debt we are talking about here are personal loans, credit card balances and other forms of 'buy now, pay later' unsecured loans. Given the average level of debt, too many people are borrowing money they have no realistic hope of repaying."

However, separate figures published today suggested consumers are heeding the warnings and becoming more responsible with their finances.

The British Bankers' Association said consumer credit - borrowing on credit and store cards, loans and overdrafts - rose by Pounds 6.4 billion last year, a sharp fall from Pounds 11.4 billion in 2004.

Meanwhile, the Building Societies Association said consumers squirrelled away Pounds 9.7 billion in savings accounts last year, the highest amount since 1997.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Pounds 600m to Be Written off as UK's Debt Crisis Grows ; CITY BRIEFING
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?