IVA & Debt Consolidation Advice

[In an article by the Independent, investment bank Goldman Sachs has claimed insolvency is set to increase by 40 per cent by 2008, and is the main source of banks' domestic retail growth. The news follows increasing numbers of people claiming bankruptcy or individual voluntary arrangements (IVAs).]

Goldman Sachs has predicted numbers of people claiming insolvency is to rise by 40 per cent in the next two years.

In figures released on November 10th, the investment bank claims that increased credit card spending and unsecured personal loans have led to a "rising tide of bad debt", reports the Independent.

Analyst James Chappell told the newspaper: "We expect bankruptcies to rise by 40 per cent over the next two years. We also expect individual voluntary arrangements (IVAs) to rise at least as fast."

Mr Chappell claimed that 85 per cent of banks' domestic retail revenue growth was due to people declaring bankruptcy or claiming IVAs.

The Independent claims Goldman Sachs is advising its clients to "sell" retail banks such as Alliance & Leicester and Lloyds TSB.

However, he warned "there would be a lag before banks picked up any benefits from rising savings and investments to offset the bad debts."

He also predicted that forthcoming changes to IVA rules would only increase the numbers of people claiming insolvency.

A report by the Insolvency Service on November 3rd, showed individual insolvencies had risen to 27,644 between July and September - an increase of 55.4 per cent compared to the same period last year.

Debt consolidator the Accuma Group reported on October 31st that the number of IVA claims it has issued has increased by 2,537 – a rise of 245 per cent - over the past 12 months.