Do Christmas And Severe Debt Go Hand In Hand?

Serious debt issues which require the use of bankruptcy or an IVA to solve always seem to rise after Christmas

. These aren't little debts; these are enormous, spiralling amounts of money. So does Xmas really have anything to do with it?

It is certainly true that the Christmas period can take up a major quantity of spending but irrespective of how many parties, how many presents, how many decorations and how much travel you pay for, surely unmanageable debts cannot be built up in just one month?

Generally Christmas extravagance does not create the need for an IVA by itself. The issues come about when people put smaller Christmas debts on a credit card - resulting in future debts. Yet this cannot account for the New Year increase in IVA interest.

What if you already have a few debts? Perhaps a bank loan to buy a car and a few of credit cards where the balances won't go down as only the minimum payment is affordable for instance? Will adding the expense of Christmas really make a difference? Does an additional 1000 matter much when the complete debts are already 15000? It might do.

IVA advisers have pinpointed the place at which people's debts turn unmanageable and require a debt management solution. This point is the stage at which your overall income is the same as your debt repayments and other expenses. When you've reached this point there's not normally a way to escape falling into a terrible debt spiral.

When you consider it in this light it becomes obvious that Xmas doesn't make the need for an IVA on its own. All-too-often, however, it is the last straw, taking debtors from controlled debt into uncontrollable debt.

Yet actual finances may not be the sole reason that Christmas and IVA uptake are so closely related. The timing of the entire situation is also a reason. After New Year, with the stress of the festive season behind them, numerous people with financial worries decide to start afresh and confront their debts head on with an IVA.

When it comes to the requirement for an IVA, the use of any credit that can't be easily paid off exposes the borrower further. Xmas of course exacerbates the risks of this happening. Please don't be tempted to consider the total of your debts and conclude that putting the festive period on credit will not matter as the spending is small in comparison to your existing debt pile.

by: mona

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