AS THE post-Christmas spending binge continues unabated, the real cost of the nation's spiralling debt continues to mount.
As we report today, KPMG now estimates that 45,000 borrowers entered into controversial individual voluntary arrangements (IVAs) with lenders in 2006 - an increase of more than 100pc on the previous 12 months.
That is 45,000 people who for the foreseeable future will struggle to get credit, whether it is to buy a house or to fix a broken boiler.
Even if they do persuade someone to lend them money they certainly won't enjoy the same rate of interest that the rest of us do. It is enough to sober up even the most hardened shopaholic.
There is also the huge cost of IVAs, which is picked up by the more responsible borrowers and savers.
The KPMG research will reignite the debate about the mis-selling of IVAs.
MPs, debt charities and senior bankers have been warning for months that those who promote IVAs are failing to spell out the long-term consequences and in some cases promoting IVAs when a personal bankruptcy would be more appropriate.
As profits at IVA firms have soared, dozens of new firms have entered the market. The schemes, which were originally designed to help entrepreneurs, are now being promoted to all and sundry.
Earlier this month leading providers of IVAs finally agreed to create voluntary industry standards. The guidelines - based on the banking code - are expected to set out how responsible debt practitioners market and advertise their services. But they could take months to draw up.
If KPMG's estimates are accurate, there is a danger that a voluntary code could be too little too late.
Source: Daily Telegraph
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