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Interest rise increases need for IVA


www.clearstart.co.uk – Higher interest rates could ultimately lead to more people needing an Individual Voluntary Arrangement (IVA) in the future. For IVA information see http A study by insolvency and bankruptcy trade body R3 has revealed that a number of small companies fear going bust if interest rates are raised to the level suggested by the Organisation for Economic Cooperation and Development (OECD). 19 per cent of those polled said that bringing the base rate up to the 3.5 per cent suggested by the OECD would send them into insolvency and unleash debt misery on thousands of workers who would be made redundant as a result. In a duel blow to those who would lose their jobs, they would also be liable for higher repayments on loans and credit card debts, making the need for debt advice even more pressing. Debt charity Credit Action’s latest figures show that the average debt of homes with an unsecured loan is £18252 and becoming unemployed would certainly affect their ability to pay it off. As a result, these people should look towards an IVA to help them ease their debt worries. An IVA is a form of debt management that is available for people with over £15000 of debt, more than three creditors and at least £200 of disposable income. As long as 75 per cent of the creditors agree to the terms of the IVA, it can begin. Typically, it should see the debtor become debt free within five years and, unlike bankruptcy, it won’t put the family home at risk. OECD’s recommendation

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