- Tuesday, 9 February 2010Spiralling debts and financial insecurity may lead many vulnerable families to seek
IVA help in the wake of the recession.
A new report by the Institute for Public Policy Research (IPPR) reveals that those hit hardest by the economic crisis were low-income households who were already open to debt problems.
In the decade to 2008, average household debt in the UK increased significantly from 93 to 161 per cent of disposable income, according to the study.
Faced with a reduction in earnings over a "sustained period of time", any savings were quickly used up and debt often spiralled out of control.
"Low income families may find it harder to save as a precautionary measure than those with a higher income, leaving them more vulnerable to shocks," the IPPR reports.
"While many families were previously 'coping' with high levels of debt, rising unemployment and repossession have made debt more visible in the current economic climate."
The IPPR has outlined a series of policy recommendations, including improved saving initiatives aimed at low income households, access to fair and sustainable credit, free financial advice, and flexibility on financial commitments, such as mortgage payments.
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