Unsecured debt levels in IVAs drop nearly £25,000

Consumers that entered an IVA in 2016 had lower levels of unsecured debt on average, compared to those in 2008.

According to its own data, TDX said the average level of unsecured debt included in an IVA fell from £48,115 in 2008 to £23,879 in 2016 – a drop of more than £24,000.

TDX said this decrease could be due to lower levels of unsecured lending after the credit crunch in 2008, which could reflect retail banks only lending to consumers with a low-risk profile.

The research is based on data of British consumers in Britain from The Insolvency Exchange (TIX), the personal insolvency platform managed by TDX Group.

The study also found the number of unemployed people with IVAs had more than tripled since 2008.

Another increase was in the proportion of benefits received by individuals with an IVA; this has increased from 10 percent to 25 percent between 2008 and 2016.

The Insolvency Exchange data also demonstrated that although individuals’ incomes had dropped their expenditure had risen reflecting the increased costs of living.

The average monthly earnings of an individual with an IVA dropped by around six percent on average between 2008 and 2016, whilst their monthly expenditure increased by five percent in this time.

Richard Haymes, head of financial difficulties at TDX Group, said: “Since the credit crunch in 2008 the profile of the typical consumer in serious financial difficulty has altered significantly, reflecting changing attitudes to borrowing and the squeeze on incomes resulting from economic uncertainty.”