In November 2007, figures revealed that there had been a drop by 3% in personal insolvencies between July and September compared to the previous three months. The numbers however are still extraordinarily high with 26,072 people becoming insolvent either by entering bankruptcy or by taking out an IVA. But many financial experts see this as a temporary blip in the wider scheme of things. In fact, insolvency is thought to rise dramatically once the impact of the global credit crunch really begins to make itself felt.

Insolvency set to soar

It's thought that the impact of the credit crunch on the corporate world will soon filter through to the general public, already consumer confidence has been knocked with faltering house prices. But in 2008 it's expected there will in fact be a sharp rise in insolvency cases due to the fact over a million people's fixed rate mortgages will come to an end with more expensive variable rates.

Insolvency in 2008

The impact of the interest rate rises in 2007 it's believed will have a marked impact on the number of people experiencing insolvency in the UK. In fact, according to some insolvency experts, personal insolvencies have ‘gone through the roof'. The drop in insolvency numbers has been put down to a tightening of restrictions from IVA providers, but in the longer term it's thought that insolvency will increase, just as house repossessions are expected to rise significantly in 2008 as debt tightens its grip on UK consumers.

Financial advisors fear rise in insolvency

Financial advisors fear that homeowners may be relying on their credit cards to pay for their mortgages as a result of the interest rate rises. Being unable to pay off a credit card quickly leads to an increase in debt, and it can soon spiral out of control. But more people in the UK are balancing their money and debt precariously, walking thin tight ropes. Just a few unexpected expenses or unfortunate costly problems can lead to a spiralling problem of debt and ultimately, insolvency.

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 0800 031 9802 or fill in our online enquiry form.