Abacus Daily Debt News

600,000 Britons Facing Insolvency

Almost 600,000 people will be unable to refinance their debts this year after their normal lines of credit are being cut off according to a report by TDX Group.

TDX Group provides detailed debt-collection information to the banks.

There are currently 1,000,000 people struggling with debt repayments. The average debt of such strugglers is £25,000, making for £25 billion worth of high risk loans creditors are exposed to. 

£15 billion of this problem debt in on credit cards.

In 2007, 400,000 people remortgaged or applied for new credit cards or personal loans to pay off old loans. 300,000 people entered into bankruptcy, debt management plans or an IVA.

It is therefore little wonder that the financial institutions are reluctant to lend each other money and the government has had to inject £50 billion in to the mortgage market.

Mark Onyett of TDX, said that 2008 was likely to be a boom year for IVA’s due to the squeeze in the global credit market causing  lenders to turn away customers who previously would have borrowed to pay off current debts. He said that as the number of problem debts ballooned, up to 600,000 people could be forced to become bankrupt or enter into an  IVA.

“For the vast majority of people this year, refinancing and remortgaging won’t be available as a solution,” he said. “Their choice will be narrowed to bankruptcy, a debt-management plan or an IVA. You could see a doubling of IVAs.”