Credit crunch ‘could cause insolvencies’

18th November 2007

The amount of individuals being declared insolvent could increase as a long-term trend due to the credit crunch, it has been warned.

James Ketchell, spokesperson for financial charity the Consumer Credit Counselling Service, notes that it typically takes some time for debts to reach an untenable level.

This could mean there is still time for Britons facing affordability constraints to obtain a solution such as a debt consolidation loan.

Mr Ketchell predicts: “There is a risk that people on cheap fixed-rate mortgages will in the future be forced on to more expensive products.”

“The thing with insolvency is that it takes quite a long time for the debt levels to build up before people have to declare themselves insolvent,” he adds.

He concludes that while it remains “hard to tell” what the full effects of the credit crunch could be, people are likely to find their financial situation increasingly “difficult” in the future.

For those who wish to take action ahead of such a situation developing, debt consolidation loans may be a sensible option.