UK Money News
15th January 2008
Banks 'prefer debt management to bankruptcy'
Banks and other lenders are interested in getting consumers into debt management schemes to avoid losing substantial sums, it has been claimed.
Personal finance firm Thomas Charles, which provides help with money advice to those in trouble with debt, states that bankruptcy and individual voluntary arrangements (IVA) are unattractive to banks because it means that they lose some of what remains owing to them.
James Falla, director of Thomas Charles, said: "[Banks] are more than happy for somebody to do a debt management plan if it takes ten years to pay the money back, because the alternative to them is this person declaring themselves bankrupt, in which case the return could be as little as ten per cent."
He added that should consumers seek out help with money in the form of an IVA, banks are likely to see the return of only 40 to 50 per cent of their outlay.
The finance news follows recent figures from the Insolvency Service which suggest 26,956 insolvencies were registered in the second quarter of 2007 in England and Wales.
Compared to a year previously, this marks a 4.2 per cent decrease.
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