Growth of average personal debt gathering pace

The average level of debt driving consumers to the solution of an IVA or debt management plan (DMP) has steadily risen over the past four months – and the intense stress that goes with it is making them ill, reports IVA comparison site IVA.com.

Over the summer the average debt accrued by those signing up for a form of debt solution via IVA.com has increased every month and now stands at a massive £47,000.

“For some people, the credit crunch is turning out to be a complete crush,” says IVA.com director Terry Balfour.

“Every day we talk to people who are desperately miserable and can’t see how they will ever get out from under the burden of their mounting debts. The more overwhelmed they feel, the harder it is to see any light at the end of the tunnel and their health is suffering.”

In May the average debt of those accepted for an IVA or DMP was £32,750. This crept up to £35,750 in June and in July the increase stepped up a gear to reach £44,500. Now August’s figure of £47,000 stands as a chilling example of the snowballing debt problem affecting the UK.

“People are telling us that they expected the credit crunch would be a temporary blip and that the status quo would be restored by now. Consequently, they didn’t act soon enough to stop the rot from setting in on their finances and now it’s too late to turn things around without help.

“No-one wants to admit they are in trouble but the sooner they do, the sooner they will stop sinking deeper and start to recover.”

Panic attacks, migraines and insomnia are common conditions mentioned by IVA.com’s callers and many believe that their health will suffer more seriously if they don’t manage to find a way out.

Stress is proved beyond doubt to cause illness and with over 13 million working days lost in the UK every year as a result, the risk that this poses to job security for those already in deep financial trouble is clear.

Recent predictions by the British Chamber of Commerce that unemployment will soar by up to 300,000 over the next two to three years coupled with official figures showing that recruitment is falling at its fastest rate for seven years indicate a tough time to come for anyone to hang on to their job, so those who have a poor record due to illness are at even greater risk.

“People tell us they are afraid to answer the phone or the door in case it’s more bad news even though they know that won’t help – it’s not exaggerating to say that many feel they are on the verge of a nervous breakdown,” says Balfour.

“Being in debt is a bit like having a niggling health problem that you think might be fatal. You put off going to the doctor because you’re scared but when you do, nine times out of 10 it’s easily remedied and the worry goes away. Debt is the same – taking the step of admitting the problem and asking a professional for help will bring immediate relief.”

IVA.com acts as an interface between consumers looking for help with their debts and the professionals who can provide the best solutions. The website lists over 1,000 insolvency practitioners and debt management plan providers from all over the UK.

“The comments posted by clients on IVA.com who have sought help with their debts are testimony to the relief that professional support can bring,” says Balfour. “Once they realise there is a way out and they can put down their intolerable burden, the stress lifts and their health is on the road to recovery.”