Debt woes force more into bankruptcy
Saturday 01 August 2009
The number of people becoming insolvent will reach record levels when official figures are published next Friday. For the first time, the number of personal insolvencies will top 30,000 for a quarter. In fact, there have been 41,870 personal bankruptcies this year – which works out at one person every six minutes. 22,976 people have entered into an individual voluntary agreement (IVA) since the beginning of the year – that's five people every hour.
Insolvencies – made up of bankruptcies, IVAs and debt-relief orders – could top 125,000 for the year, according to insolvency experts Tenon Recovery, which is almost double what they stood at just four years ago. The number of people who saw their financial situation collapse in 2005 was 66,646. The figure had soared to 106,348 by last year and will leap again in 2009, says Carl Jackson, national head of Tenon Recovery.
"The figures for the first quarter of 2009 showed record highs of personal insolvencies, and it is likely this will again be the case when the latest statistics are announced," Jackson says.
When workers are made redundant, there is normally a six- to 12-month time lag between their losing their jobs and falling behind with debt repayments, and eventually going into insolvency. It means even if the economy improves, the number of people being declared insolvent could go on rising for some time to come.
Worryingly, the number of younger people – between 18 and 24 – becoming insolvent has increased by 50 per cent over the past 12 months. "The rise in bankruptcies within younger age groups is particularly concerning and reflects the vulnerability of this generation as a result of their youthful recklessness and lack of education in managing their finances," Jackson says.
Next week's figures from the Government's Insolvency Service will include debt-relief orders (DROs) – a new halfway stage to bankruptcy – for the first time. Some 2,444 people have applied for a DRO since they were introduced in April, which works out at 25 people per day. However, there has been a rise of 25 per cent in the number of people entering into a DRO in the past four weeks compared with the four weeks previous, says Jackson.
"They are proving popular with those struggling with severe burdens and we are likely to see increasing numbers of people making use of these to address their financial issues," he says.
But insolvency can be avoided. Careful budgeting and sensible spending can be the difference between keeping or losing control of finances. There are a number of organisations that can help people who are facing severe financial problems, but a key part to getting help is admitting you have a problem.
But almost half of those in serious debt are too scared to take action because of the social stigma attached to it, according to research published this week by talkaboutdebt.co.uk. People are worried about the reaction of loved ones, which means they don't talk to them about their problems. The longer they delay doing so, the further into trouble they get.
Andrew Redmond, an insolvency expert, says: "It's enormously hard to face up to a debt problem, and sometimes even harder to share that problem with loved ones. Often, people delay dealing with the problem – hoping for a financial windfall which doesn't come. Sharing a debt problem with a trained adviser can be the first step in solving that problem."
According to talkaboutdebt.co.uk's research, the average debt among people experiencing bankruptcy, a debt-management plan or an IVA is £25,115, although about one in 10 has debts higher than £60,000. Nearly a quarter have no idea how long it will take them to pay their debts off.
Women are even more affected by the pressure of serious debt than men, with three-quarters saying they are not sleeping because of the related stress, compared with three out of five men. But taking that first step is easy, and needn't cost a penny. There are many experienced debt experts who will advise you for free – the key is to contact them before you sink into debt that you can't control.
You can get free advice at your local Citizens Advice Bureau, for instance, or from the Consumer Credit Counselling Service on 0800 138 1111 or the National Debtline on 0808 808 4000.
In the black: How to avoid insolvency
Tenon Recovery gives its top tips
* Get a financial healthcheck
Many people get into trouble because of lack of awareness in relation to their finances; there is plenty of advice around and it is worth getting a financial healthcheck to avoid any future difficulties.
Set yourself a sensible amount that you can afford to spend and keep within those limits. Make sure you get bank statements regularly so you know exactly where you are in relation to your budget.
Many people get into trouble by confusing necessities with luxuries. Make a list of your monthly expenditures and work out which you can live without.
* Shop around
There are often cheaper alternatives, even for everyday items. It is worth looking around to get the best deals, as these savings all add up. The internet is a particular good place to look.
* Stick to cash
It's easy to get carried away using a credit card, and a lot of people forget just how much they cost in terms of interest. Sticking with cash means you are more likely to think twice about any purchases; it is also easier to keep track of your outgoings.
- 1 Games of Thrones actor Lena Headey makes emotional promise to her unborn daughter
- 2 Isis burns woman alive for refusing to engage in 'extreme' sex act, UN says
- 4 Female Muay Thai champion hustles coaches to give them a beating
- 5 Picture of couple posing with beached dolphin 'that later died' causes outrage
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
Report finds that Britain's wages are the most unequal in Europe
The day that Britain resigned as a global power
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
SNP fury as HS2 finds 'no business case' for taking fast train service to Scotland
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...
Day In a Page
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof