Monday 7th January, 2008 

Personal insolvency is predicted to increase by 15% making 2008 potentially the worst year for Individual Voluntary Arrangements (IVA's) and bankruptcies, financial experts claim.

KPMG have estimated that the number of IVA's and personal bankruptcies will top 130,000. This will represent 15% increase on 2007 figures. They estimate that approximately £1.3 billion was written off last year through the IVA process. Their research also reveals that the average debt owed was £50,300 with only £19,100 being repaid.

The increasing popularity of IVA's as a tool for debt problems has been a matter of concern for many creditors. They prefer to get the total amount borrowed plus profit/interest. An IVA will only return a percentage of the amount owed, the rest being written off.

Debtwatchdog is concerned with these figures as it indicates that many people will not have realistic chance of paying off their debt. In the past many people have used easily available credit to finance their lifestyles and/or to pay the minimum payment on other debts. However, with the impact of the credit crunch and lenders tightening their belts accordingly the decreasing availability of cheap credit will make life very difficult for those with debt problems.

Debtwatchdog encourages it's readers to take the initiative and start sorting out their finances now before it is too late. Whether you have a small or large amount of debt the key to your future prosperity is to balance your finances. This can be achieved through using our Statement of Affairs calculator and seeking advice of our debt forum members.