Bankruptcy fears rise as debt levels increase
Joanne Wright, a partner at insolvency specialist Begbies Traynor, said figures released by the Department of Trade and Industry showed a 57% increase in people declaring themselves bankrupt.
There were 20,461 personal insolvencies in the UK in the final quarter of 2005 and a 37.6% year-on-year rise.
She said: "People are not looking at their problems – they are borrowing more and switching debts between credit cards because they have become so used to juggling debts.
"It is only when their cards and loans are maxed they realise they have nowhere left to go."
Mrs Wright pointed the finger at the rising rate of personal debt, slow economic growth and changes in bankruptcy legislation, which means people are now only not allowed to get credit for a maximum of 12 months.
She said: "People realise they can declare themselves bankrupt and could be free of debt within two or three months.
"I have heard of credit companies ringing people on the same day they have been discharged to offer more credit.
"Quite often, the first question they ask is when they can take out more credit despite the fact they have just got themselves out of £30,000 of debt."
Statistics show the most popular way out of debt has been through Individual Voluntary Arrangements – under which a person agrees to repay a set amount each month in exchange for interest on their debts being frozen – doubled year-on-year from 3,206 for the last quarter of 2004 to 6,960 for the same period last year.
Debt Free Direct, based on the Ackhurst Industrial Park, Chorley, specialises in IVAs.
Derek Oakley, head of insolvency, said: "These figures are an accurate reflection of a percentage of the population which is irreversibly in debt. There is nothing to suggest this trend is slowing down."
Begbies Traynor, which has offices on Winckley Square, Preston, specialises in recovering companies which have run into financial difficulties and broke into the personal insolvency market with the acquisition of Chorley-based W3 Debt Solutions last year
Taken from Preston Today 6th February 2006