We’re a nation of shopaholics, according to uSwitch.com. The site reckons that 7 million people in the country are ‘in the grips of shopaholicism’, picking up debt in the shops buying things they might not even need.
People always point to spending figures and high high-street sales as a sign that the economy’s doing well as we hope for a ‘consumer-led recovery’. However, that’s not necessarily the case. After all, if people are spending money they’ve borrowed, that’s not a good thing if they’re borrowing more than they can afford to repay – it means those same people will have less to spend in the future, so in the long run it’s not good for the economy.
So uSwitch estimates that they’re carrying a personal shopping debt of over £3,300 on average. If they can afford it, that’s no problem. If they can’t, they really need to do something about it.
One thing they could do, if they can’t afford their debt payments anymore, is think about entering a debt solution like an IVA – and Individual Voluntary Arrangement. An IVA is a kind of insolvency that lets them repay what they can of their unsecured debts (over a five-year period, in most IVAs) and their creditors will write off the remainder at the end of the IVA if they’re able to do that.
It’s no easy way out of debt, though, and they’ll have to think through the consequences carefully before they commit themselves. It’ll damage their credit rating. It’ll require them to free up equity from any property they own. It’ll limit their ability to get credit.
Plus, there’s not much point in someone entering an IVA if they’re going to keep up their old bad habits, like spending and borrowing too much.
Having said that, if someone realises they’ve run up too much debt and they can’t repay it like they said they would, an IVA could be the best option they have available to them. If they change their shopping habits and stick to the terms of the IVA, an IVA could be the best way for them to get out of debt.
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