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Debtors dither over insolvency decision

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Uncertainty about the direction the economy is heading this year is holding debtors back from entering a formal arrangement to deal with their problems, according to

Terry Balfour, spokesperson for the comparison site, said: “Compared to the speed with which the credit crisis has worsened this year and the daily increase in personal debt levels, today’s insolvency figures, while having risen for the first time in a year, are still lower than might have been expected.

“But it would be wrong to interpret this as a sign that, actually, people aren’t in as much trouble as we thought. Serious levels of debt are a major problem for many thousands of UK consumers and the reality is that professional help is, for many, the only way they will be able to turn things around.

“On a daily basis we speak to people who are struggling to cope with very difficult financial circumstances but they are reluctant to commit to a binding agreement such as an IVA until they are certain that it’s their best course of action.”

Balfour added that with the worst drop in house prices since 1996 just announced, the reality for people in serious debt is likely to get worse before it gets better.

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