Bank Rates Rose to 4.75 percent, What That Means To Those with Debt
By: Diana Middleton

The Bank of England recently announced that interest rates will be raised by a quarter of a percent to 4.75%. The move surprised many and will likely have consequences for many borrowers in the UK who are struggling with their personal debts.

A report in April by Thomas Clarke, the debt consultancy service, suggested that one fifth of people with debts over £10,000 thought they were 'quite likely' or 'very likely' or even certain to become insolvent. According to their report there are eight million people in the UK with unsecured debts over £10,000. A substantial part of this debt was due to unsecured borrowing on credit cards, overdrafts and bank loans. The number of people with 'extreme debt' problems is also rising. The count of individuals with debts exceeding £100,000 has doubled within the last year according to Consumer Credit Counselling service.

The recent rate hike could mean that there are over a million people in the UK who could be very close to insolvency. It now seems very likely that over 100,000 Britons will become insolvent in 2006. Most will declare themselves bankrupt and others will try to negotiate an IVA (Individual Voluntary Arrangement).

Recently, there were signs that consumers were getting to grips with their unsecured borrowing. A more recent report by CreditExpert suggested that three quarters of people in the UK were comfortable with their debts. A fifth said that they had reduced their level of borrowing in the previous six months.

After a surge in utility bills and fuels costs, as well as tax increases, the increased monthly payments on many consumers' debts could simply push them over the edge.

Article Source: http://www.ArticleJoe.com

Diana Middleton writes on matters relating to debt advice in the UK, and especially debt problems. She is particularly interested in personal finance, writing on best approaches to getting a secured loan, and the background issues relating to debt consolidation.

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