Boom in bankruptcies predicted for 2009

Bankruptcies are predicted to go through the roof in the coming months as rock bottom equity levels in debtors’ homes means they are of little or no value to creditors, according to debt solution website IVA.com.

Traditionally, bankruptcy has been the most feared final solution for debtors because it means they must sell their property to release funds to pay their debts, but with the dramatic fall in property values over the past year, there’s little – if any - profit to be gained by creditors forcing bankrupt debtors to lose their homes.

“Over the last quarter of 2008 the number of people who chose to resolve their debt problem via IVA.com with bankruptcy increased by 50% and I expect this trend to continue as more and more people find themselves unable to struggle on,” said IVA.com director Terry Balfour.

With house prices predicted to remain in the doldrums this year and the continued stagnation of the property market, more people applying for debt help will NOT be forced to give up their homes.

“As long as they can pay the mortgage and avoid repossession, homeowners opting for bankruptcy will – in a bizarre twist of fate – be in a better position,” says Balfour.

“But that will only happen if they do something now to stop their debts from multiplying to a point when they can’t pay the mortgage. If that happens, they will lose the lot.

“Serious debt is like quicksand – it’s very difficult to extricate yourself from the downward pull on your own. The key to reaching firmer ground is to ask for help.

“So many people are going to find themselves in this position this year that the stigma of bankruptcy really shouldn’t put them off what can be the most straightforward and quickest form of financial recovery.”

Depending on the amount owed, the bankruptcy process can take one to three years to complete, after which time it’s possible to make a fresh start.

Voluntary bankruptcy involves giving up possessions of value and getting used to managing on a restricted income without credit.

“No debt solution is a walk in the park as it involves a radical change in lifestyle, but the benefits are immense,” says Balfour.

“If you take steps to control your situation now you can get back on your feet and move on with your life. For anyone with serious debts, it’s the best possible way to get on the road to recovery this year.”

For further information, visit iva.com