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T O P I C R E V I E W
BankruptcyNews
Posted - 14 May 2007 : 10:46:52 Inflation to fuel bad debt
Record levels of inflation may fuel a surge in bad debt in the UK, leading to a potential increase in IVAs and mortgage repossessions.
The recent increase in consumer inflation to 3.1 per cent in March has been highlighted as a factor that may lead to an increase in bad debt levels, having already prompted an increase in interest rates to 5.5 per cent.
Experts at Experian warn that bad debt could be set to rise in this climate, as affordability pressures grow and consumers find themselves financial stretched.
"Not only will interest rate increases have a dampening impact on economic growth and inflation, but there will also be a likely knock-on impact on bad debt," explained Neil Blake of Business Strategies to Credit Control.
"Many consumers will also need to consider carefully their future circumstances when assessing their financial position."
Figures reveal that over 44,000 people entered into an IVA in 2006, an increase of more than 80 per cent on like figures for 2005, according to 24 Dash.
