Mortgage arrears are rising according to a recent news report by the BBC. As a result more homeowners are being forced to make big decisions about their finances and find ways to avoid the very real risk of house repossession. For many, an individual voluntary arrangement offers a debt management plan that, unlike bankruptcy, means they can still hang on to their homes.

Individual voluntary arrangement: Dealing with debts

Bradford & Bingley, one of the UK's biggest lenders, has reported a significant rise in mortgage arrears, indicating the extent of the problem. Being unable to pay a loan, especially one secured against your home, can quickly lead to eviction orders. Entering an individual voluntary arrangement is one way of dealing with debts that have become scarily unmanageable.

Arrears increase as homeowners struggle

As the housing market is hit hard by the credit crunch, some buy-to-let landlords are struggling, as are those homeowners who took out 100% mortgages or over-borrowed to get on the property ladder. More than half of Bradford & Bingley's home loans were made to buy-to-let landlords. The bank insists this sector is strong as more people in the UK turn their backs on buying property during the slump and see the benefits of renting. However, arrears levels have risen, the bank told the press, "reflecting increasing payment strain." The rise in debt management strategies, such as taking out an individual voluntary arrangement, backs up the findings that certain sectors of property owners are struggling. The bank added: "We have repriced our mortgage products in recent weeks which has widened new business margins considerably, more than compensating for the higher cost of funds on these most recent loans."

Entering an individual voluntary arrangement

As a result of an increase in arrears, banks such as the Bradford & Bingley are raising interest charges and demanding larger deposits – adding an increased financial strain on those entering an already expensive property market. For those who have over borrowed, the high costs leave them vulnerable to debt and arrears. And as some jobs could end up being cut, some homeowners will have to take on extreme debt management solutions such as an individual voluntary arrangement to stay afloat through the credit crunch.

Speak to Varden Nuttall About An Individual Voluntary Arrangement

Varden Nuttall has been established for over 15 years and is dedicated to helping people in financial difficulty find a debt management solution through an Individual Voluntary Arrangement (IVA). Employing 90 people, including trained and skilled IVA administrators, we are one of the largest IVA companies in the UK and handle over 3% of all IVA applications. To find out more about the company, or to make an appointment to talk about putting an IVA in place, call us today on 0870 977 8100 or fill in our online enquiry form.