More Brits may face bankruptcy in 2008, warns Addidi

More people in the UK may face bankruptcy or be forced to arrange an IVA (Individual Voluntary Arrangement) this year, Addidi Wealth has said.

The financial planning and wealth management service warns that the global credit crunch may severely affect consumers if credit is not made more easily available.

Research conducted by debt-management company TDX Group and published in April revealed that an estimated one million people are struggling to cope with an average unsecured debt of £25,000, with total UK consumer debt standing at £1.4 trillion.

It was also found that the credit crunch could double the number of people falling into to debt this year.

With the cost of living increasing, as well as the rising cost of mortgages, food bills and fuel, the research shows that the number of people taking out IVAs could double this year.

Anna Sofat, founder of Addidi Wealth, says: “Last year there were already more people declaring themselves bankrupt or having voluntary arrangements with their debtors and I think that will increase this year.”

Tags: year, trillion, voluntary arrangements, GBP, double, individual, financial planning, TDX

Credit checks toughen up

The days of cheap credit seem well and truly over – for now at least – as lenders get tough in the light of global financial chaos.

The credit crunch is beginning to bite, with more and more lenders getting tougher with credit checks, new research has found.

Signing up for a new mobile phone, credit card or hire-purchase agreement can often require a credit check, and a growing number of shoppers are being turned down, according to Equifax.

“We have already heard how high street lenders are cutting credit limits and putting up interest rates, but this also applies to the smaller credit lenders,” spokesman Neil Munroe told the Independent on Sunday.

Recent research has shown that personal loans are getting harder to come by, with many providers simply abandoning the market.

“Credit providers use a ‘credit scoring’ system based on an individual’s credit history to calculate risk and to decide whether to lend,” agreed James Jones of Experian.

“They are now only granting credit to those with the best scores.”

Even catalogue purchases are being affected, Mr Munroe noted.

He warned: “In the past, they might have overlooked the odd missed payment here and there, but we are now finding that slight misdemeanours on your credit file can matter a lot more.”

Tags: individual, individual's credit history, James Jones, Credit score, Business Finance, scores."Even catalogue purchases, smaller credit lenders, credit scoring