IVA applications look set to increase as house prices fall

Tuesday, 24, Mar 2009 12:00

According to a number of professional bodies and financial companies an increasing number of middle-class families are currently requiring debt management solutions to help solve their financial problems. One of the main reasons being cited in this current economic climate is the result of house prices continuing to fall meaning that many families are currently holding negative equity in their properties.

The overall decline in property prices in the UK has led to people no longer being able to raise the additional funds required via remortgages as way to pay off outstanding debts such as personal loans and credit card payments. This has meant a number of middle-class families facing financial difficulties as they struggle to meet their repayments terms of their current mortgages.

Other reasons in the current economic downturn such as the decreasing amount of available jobs prospects and the number of redundancies as is also considered to be a large contributing factor for the current debt accumulation trend.

The proportion of homeowners being forced to declare insolvency has doubled since 2007 and is set to rise further.

One statistic released by Grant Thornton suggested homeowners accounted for 70% of applications for IVAs received by the company in 2008's second half, up from 58% in its first half and 35% in 2007's first half. Figures for the first half of 2009 are expected to increase further which will only highlight further the current difficulties for many in the credit crunch.