Interest rise could result in debt misery

Thousands of Britons could be looking for debt solutions if the Bank of England's base rate is increased, according to the insolvency and bankruptcy trade body.

R3 conducted a survey amongst small businesses and discovered that the higher the interest rate became, the more firms would become bankrupt, causing the unemployment figures to soar.

If the interest rate is increased to 3.5 per cent, as the Organisation for Economic Cooperation and Development (OECD) recommend, it could lead to around a fifth (19 per cent) of small firms going bust.

In a double blow to those who would lose their jobs, the increasing interest rates will mean they have higher repayments on personal loans and credit cards as well.

This will heighten the need for them to seek debt management solutions to get themselves out of a debt spiral.

Atlantic Financial Management's director, Kevin Still, says: "Increased interest rates would certainly impact millions of homeowners who are barely coping to manage their personal debts.

The new coalition government would not want new categories of 'Middle Class' and 'Self Employed' debtors becoming a burden on the state, which could be a distinct possibility. Many may need to look at managed debt solutions, like a Debt Management Plan (DMP) or an IVA."

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