03/01/07 - Conservatives Set Out 5 Steps To Protect People From The Debt Trap

According to a report by accountants Grant Thornton there could be 30,000 personal insolvancies in the UK by April.  They blame this on increased borrowing, higher interest rates and large utility bills.

According to the the firm 2006 will have seen more than 100,00 personal insolvancies and expects even more in 2007.

The trend has also seen a marked increase in the number of people entering Individual Voluntary Arrangement (IVA) which is a formal alternative to bankruptcy.

The Conservatives believe the following can be done to help tackle debt.

1. Financial skills should be taught in school between the ages of 11 and 18.
2. Credit card companies should give people clearer information - like facts about exactly how long it takes to pay back your credit card debt if you only pay back the minimum amount each month.
3. A rule should be introduced so that new store cards couldn't be used until seven days have gone by. This might help people to stop and think about whether borrowing money through an overdraft extension or a personal loan might actually be better for them.
4. There's a lot of aggressive and often downright misleading marketing of Individual Voluntary Agreements (IVAs), which are a bit like bankruptcy agreements. We think that the rules governing the marketing of IVAs need to be more rigorously enforced, and the advice given by IVA advisers carefully policed.
5. Finally, a bit more competition and lower interest rates in the home credit market would really help some of the poorest people in our society. Home credit companies should be subjected to the same sort of data sharing requirements as mainstream lenders, enabling borrowers to switch between lenders without losing their credit history.

Cllr Justin Tomlinson, "It is becoming increasingly easy for people to be attracted into the trap of debt.  As a matter of urgency we need to change the system to protect people, and that is why we have set out 5 steps that will make a significant difference."

If you want further advice to help you keep out of debt, or manage your finances more effectively check out http://www.sort-it.co.uk/issue01/