Serious debt rises as downturn bites
The number of people in Northern Ireland struggling with serious debt problems has risen as the credit crunch begins to bite, new figures out today showed.
Credit bureau Stubbs Gazette has found that the volume of Northern Ireland residents entering into Individual Voluntary Arrangements (IVAs) with people to whom they owe money had increased year on year by 9%.
An IVA is a formal agreement between a debtor and creditors that sets out how the debtor proposes to repay creditors, usually over a period of about five years.
Last year’s total of 512 IVAs was up almost 200% on the 2004 total of 172, providing an indicator of the rising level of debt in the province in recent years.
Many people have been saddled with large debts after over- borrowing to buy homes, cars and other items during the property-driven economic boom. But a rise in job losses following the economic downturn, rising costs for goods and tighter credit requirements from banks has led to an increasing number of people defaulting on loans.
The number of voluntary arrangements set up has increased in each of the last three years since the IVA process was deregulated so that an agreement could take place without the need for a court order. There were 299 IVAs in 2005, which rose to 383 in 2006 and increased to 470 in 2007.
Laura Byrne, general manager for Stubbs Gazette in NI and Scotland, said: “The 2008 figures demonstrate the increased commercialisation of the IVA process whereby Northern Ireland debt advisers encourage debt laden consumers to take the IVA route to reduce levels of debt.
"What few people realise when they opt for an IVA is that credit reference agencies like Stubbs Gazette hold these details on file and that a creditors arrangement made this year will effect an individual’s creditworthiness for many years to come.”
Stubbs Gazette Credit Bureau provides businesses and consumers with both consumer and commercial risk information.