Hond Financial

Posts Tagged ‘individual voluntary arrangements’

The recent news that the economic recession is being experienced with more vigour than ever is providing us with little hope that a recovery can feasibly be forecasted. The property market, an frequently relied upon measure of the economy, is projected to start enjoying a fragile recovery while several analysts are asserting that there will be a reduction in levels of personal debt.

Is there any reliability in judging trends in consumer behaviour when they reflect a heavy reliance upon credit? This article looks at the reasons for our attitudes towards credit cards and explores what experts predict for 2010.

The statistics that have been released thus far during 2009 have given a depressing insight into the influential effects that the recession has had on the area of personal finance. Whilst the figure of average household debts has risen to £52,290 with the inclusion of mortgages, the growth of total personal debt decreased.

It is worth noting that although the overall figures given for personal debt were documented to have increased to £1,457bn by September, 2009, tighter regulations on consumer credit facilities and general lending continue to be enforced. As identified by many analysts, there has been a worrying increase in the trend of relying upon credit in order to sustain untenable standards of living.

Experts have provided figures that document a 100 per cent increase in borrowing between the second and third quarters of 2009, and many remain worryingly uninformed about the risks of accepting unfeasible amounts of debt. The popularity of debt websites, dealing with IVAs (Individual Voluntary Arrangements) and debt consolidation, that provide tools that enable you to calculate and consolidate credit card debt indicates that there is a widely recognised crisis in the sector of personal finance.

Widespread disquiet is also prevalent in projections on figures of consumer debt in 2010. Concern over the UK’s predicted 2.4 per cent increase in the figure of consumer debt has been raised by the International Monetary Fund as it stands in direct contrast to a projected 2 per cent decrease in the USA, whilst there is also concern about a projected rise in default rates on loans increasing to 3 per cent.

With this increase and evident disregard for lessons presented by the recession and its consequential effects, it would appear logical to predict a future crisis within the personal finance sector, with repercussions experienced in outlying financial areas. There will be a fresh increase in the requirement of debt, bankruptcy and IVA advice, with consequences that will place an increased strain on lenders.

Though many sectors have been privy to difficult and harsh lessons subsequent to the economic recession, it would seem that even stricter restrictions on consumer credit have yet to positively influence our behaviours towards credit and debt. Experts may be correct in predicting recovery within the property sector however until attitudes to debt are altered, the fragile and tentative efforts in rebuilding the economy could be abruptly halted by our own insufficient credit management.