Debt -
600,000 Britons Can’t Refinance Debt This Year- Report - 16/04/2008
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A report has suggested that about 600,000 people in the UK will not be able to refinance their debts this year.
The report published by debt management analyst, TDX Group, said that about one million people have collectively piled up an unsecured debt mountain of £25 billion that they won’t be able to repay, which will cause an average financial headache of £25,000.
Last year nearly half a million people remortgaged their property or took out new personal loans or applied for new credit cards to pay off existing debt. Also in the same year more than a quarter of a million consumers opted for bankruptcy, debt management plans or individual voluntary agreements (IVAs).
IVAs is usually an agreement in which the creditor or lender accepts a reduced sum in settlement of the debt, and the debt is paid off over an agreed period.
Chief executive of TDX, Mark Onyett said there is possibility that there will be a sharp increase in IVAs this year, with figures probably doubling as credit to be used in paying off existing debt becomes very hard to find.
Companies that specialise in securing IVAs agreement between the lender and debtor often charge as much as much £5,000 to £9,000 to help with the deal. Fees are taken from the client’s repayment.
But figures suggest that at least 45 per cent of IVAs fail because repayments are not completed. This, in the end, leaves debtors with the choice of almost getting bankrupt, as the fees charged by IVA companies are added to their debt burden.
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