It was recently reported that over the past few weeks Brits have been whipping their credit cards back out and hitting the High Street and Internet shopping sites with a renewed confidence. Whilst the recession is not long over and the effects of the global financial crisis are still affecting the nation consumers seem determined to spend their way out of the financial gloom.

However, whilst this increased spending may prove to be good news for the retail sector, which has suffered massively over the past year, it could also lead to consumers burdening themselves with debts that they will struggle to make repayments on. Some consumers are already burdened with debt, and additional debt could tip them over the financial edge.

There are now concerns that increased spending by consumers in the UK could lead to more and more people finding that they can no longer cope with their debts or make repayments on the amount that they owe. Officials believe that this could lead to an increase in the number of people applying for an IVA, or an Individual Voluntary Arrangement, which is a softer form of bankruptcy.

An IVA can have a profound effect on the credit rating and the financial future of the borrower, and should only be used as a last resort by those that are experiencing financial difficulties. However, the more people borrow the more they are likely to be desperate to escape their debt, and for some this may seem like the easy way out, as many fail to recognise the long term repercussions.

Of course, this doesn’t mean that those that have genuine problems with their debts and who are seriously struggling to make repayments do not have some form of help at hand. In actual fact there are many alternatives that consumers could look at which would not have as profound an effect on their financial future as an IVA or bankruptcy.

One potential solution is to contact creditors directly in writing or person, explain the financial situation, and look at making a reasonable repayment offer over an extended term – most lenders will consider this especially in the current climate.

Another option is to go to a debt management agency, preferably a charity run or government run one that does not charge fees. You may then be able to get advice to help you to manage your finances more effectively or may be able to get onto a debt management plan.