Advanced Search

Wanna Argument?

Is Britain on the brink of a debt explosion?

UK consumer debt has broken through the £1 trillion barrier for the first time. A trillion is one thousand billion. It looks like this: £1 000 000 000 000! The level of indebtedness is showing through in figures for Individual Voluntary Arrangements (IVAs). IVAs are an alternative to declaring yourself bankrupt. An IVA is a formal arrangement where you agree to repay a set amount of your debt each month. In return, your interest payments are frozen.

The growth in insolvency is good news for debt management firms, who are gearing up for a large increase in business. But it's also a worrying sign of the impact of high levels of debt in the UK - especially since interest rates are on the rise, with further increases looking likely.

Look into the data from the Insolvency Service, (a government agency whose mission is to deal fairly and effectively with financial failure), and you find an alarming hike in the number of individual insolvencies:

IVAs by quarter 2006

• Q1: 7,961
  • 13.7% increase on Q4 2005
  • 141.9% increase on Q1 2005
• Q2; 11,105
  • 34.9% increase on Q1 2006
  • 153.2% increase on Q2 2005

Seen in graph form, the steep rise in IVAs and bankruptcies is clear:

Back to the Argument