20% of Those Retiring in 2011 Still Carrying Debt

A recent survey carried out by insurer Prudential has revealed that 20% of people retiring this year will still have debts when they finish working – owing an average of around £33,000 each.

As The Telegraph reports, the survey also revealed that one in 20 will finish work with unpaid debts of more than £50,000. This figure rises to one in 10 among men aged over 65.

Women are less likely than men to take their debts into retirement with them – with around 18% of women saying they would still owe money on retirement, compared with 23% of men. Women are also taking less debt into retirement with them – an average of £25,100, compared with £39,500 for men.

The highest percentage of people taking debts into retirement with them was recorded in Wales, where 37% of people finishing work this year would still owe money. This was sharply contrasted by the figure recorded in the east Midlands, where just 11% of people who expected to retire this year thought they’d do so with debts to their name.

The largest average debts in retirement were recorded in the South West, where those finishing work this year carried a debt of £69,100 each. New pensioners in the North East are carrying a lot less, though, with a debt of £12,700 each.

The research also revealed that over half (55%) of those retiring with debts this year had racked up debts on credit cards, while 52% hadn’t yet managed to repay their mortgage. Just under one in five (19%) owed money through bank loans, 14% had overdrafts and just 1% had unpaid debts to loan sharks.

On top of those who expected to carry their debts into retirement with them, 14% didn’t actually know whether they would have repaid their debts by the time they finished working.

Spokesperson at Prudential, Vince Smith-Hughes, said: “These figures show how the ‘class of 2011′, a previously risk-averse generation of savers, took advantage of the consumer credit boom of the last decade.

“Total consumer debt has more than doubled since 2000 and a large number of people planning to retire this year are now faced with spending a significant part of their retirement income meeting these debt repayments.”

A spokesperson at http://www.debtadvisorycentre.co.uk, commenting on the findings, said: “Anyone carrying debt into retirement will have to make sure they’ve got enough available money to cover their monthly payments until their debts have been repaid.

“That can be particularly difficult in retirement, so those who haven’t retired yet should focus on repaying as much debt as possible before they finish work – so they’re not left with the risk of unmanageable debt in the years after work.

“We would strongly advise anyone struggling to repay their debts now to address the issue so it isn’t a problem later. Speaking to a professional debt adviser could be a good place to start.”

What is Exactly an IVA?

Have you heard about IVA? The term IVA or Individual Voluntary Arrangement have been strange words for many people. However people nowadays are more familiar with the term. An Individual Voluntary Arrangement, also known as IVA is basically another alternative that can help you avoid going into bankruptcy. Remember bankruptcy is a death in your financial life.

By choosing IVA, you can easily stop interest rates by having legal agreement between you and your creditors. At the same time you can go for lower amount of payment. In the individual voluntary arrangement, the debtor with the assistance of insolvency practitioner (IP) request to the court. Then they apply to the creditors to pay all or part of the debt.

Hence, you don’t have to face the creditor anymore. You only need to follow their rules and regulation. And bear in mind it will drag your payment to longer period but you will pay for fixed amount every month in affordable manner. This is the best thing in IVA and it will help you clear the debt until the end of agreement.

However, sometime we are confuse and difficult to make a choice. First of all get the expertise in debt management. Normally it can be done by consulting a debt management agency. These agencies will help you to deal with all your creditors. In addition they will give you essential advice on bankruptcy and managing your debt.

When you are eligible to IVA, this is to summarize the benefit you will get:
The repayment of you debt will be consolidate into a single monthly payment
Your credit repayment will be more affordable.
You can avoid the bankruptcy

As a conclusion, individual voluntary arrangement is one of the best alternative ways to avoid bankruptcy. However, the debtor will still face with bankruptcy if their IVA application is rejected. So it is necessary to do some research and consult the expertise before opting for IVA and submit the proposal to the creditors.