Going On Holiday Will Further Nation s Debt Difficulties

Those Britons who gone further into debt as a result of going on holiday could be set to face unmanageable financial difficulties, one industry expert has suggested.

According to Philip Long, insolvency partner at accountant and business adviser PKF, those households who are already in the red will have only exacerbated their problems through a desire to go on a break abroad during the summer. He suggested that by making use of personal loans, credit cards and other forms of borrowing to help fund a holiday, consumers across the country may well find themselves in “the lurch as the financial chickens come home to roost”.

Mr Long warned that with many households already being near to financial breaking point before leaving the country, getting further into debt so as to go on holiday could well see them become unable to make repayments on loans when they return home. He said: “Next to Christmas, the summer period is one of the main pressures people face to spend. Everyone likes a break and those in debt have more reason than most for wanting a distraction from everyday problems. The issue is whether they can afford it or whether any additional spending on top of interest rate hikes just makes their situation worse.”

And despite Mr Long pointing to government statistics showing a decrease in the level of those filing for an individual voluntary arrangement (IVA) or bankruptcy during the three-month period between April and June, he claimed there will be a rise in those finding themselves unable to make repayments on loans and other forms of borrowing. With the summer at an end and “no letup from the Bank of England likely”, the partner suggested that the number of people filing for insolvency is soon set to surpass the 30,000 mark for the first time. He also pointed to recent figures released by Citizens Advice which reveal a 20 per cent increase in the number of people looking for guidance on debt matters, which could include managing on a budget and paying off personal loans. As a result, Mr Long suggested such statistics “strengthens my opinion that insolvencies are on the rise again”.

However, those who find that they are in an insurmountable position to pay back money owed on personal loans and credit cards could find that an IVA or bankruptcy is not the right option for them, as doing so could damage their credit rating and hamper their access to mainstream borrowing. As a result, taking out a bad credit loan may well be an advisable option for those looking to get back on their financial feet.

Earlier this year, James Cotton, mortgage specialist for London & Country, reported that such people with a poor financial history could still accepted for a loan by many mainstream lenders. He said that although consumers may assume that the fact they have had credit difficulties in the past will mean that high-interest borrowing is the only option available to them, they may still be able to access competitively-priced loans as “some lenders are more lenient that others”.

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