Sam Dunn: No easy escape for the bankrupt baby boomers

The profile of a bankrupt used to be that of a shattered individual who had fought and lost a battle with a drastic change in personal circumstances - brought about by a failed business, or perhaps by redundancy or divorce.

The profile of a bankrupt used to be that of a shattered individual who had fought and lost a battle with a drastic change in personal circumstances - brought about by a failed business, or perhaps by redundancy or divorce.

But today, as an advertising creative might say, bankruptcy is rebranding itself.

A report into personal insolvency in England and Wales, due this week, is set to mirror a trend already seen in Scotland, showing that bankruptcy no longer carries the same stigma as in the past.

Research by the accountancy firm PKF into debt levels in Scotland has revealed a sharp rise in the percentage of personal insolvents under the age of 30 - nudging 60 per cent of all bankrupts in a batch of recent cases.

In some cases, individual debts stood as high as £60,000 but it wasn't the figures that really caught the eye. Rather, it was the nature of the unfortunates' indebtedness.

Huge bills for chi-chi furniture, clothes, shoes and the other accoutrements of modern life, racked up on credit cards, were principally to blame, according to Bryan Jackson, author of the report.

"Lifestyle expectations have soared," he warns. "Regardless of whether they can afford it, young people are buying up anything new that comes on the market - and are funding their purchases on credit."

His comments reflect a cultural shift that threatens to redefine our perception of debt.

Bankruptcy legislation in England and Wales, designed to give entrepreneurs a second chance, has become for consumers a light at the end of the debt tunnel that is permanently switched on.

Formerly, bankrupts were left out in the cold for three years, but these days you can be discharged after one year - or less, if the courts look favourably upon you.

Many believe that such an escape route is leading us into a Babylon of debt, and the figures certainly point that way. Credit card borrowing in the UK is approaching £60bn, while our overall personal debt level has broken through the £1 trillion barrier.

The danger is that these two figures are now so large they have become meaningless and fail to resonate with credit-card users. With the gush of deals on offer from lenders eager to pick up customers, market share and profits continuing unabated, it's no surprise people take on more debt than they can really afford.

Banks and lenders have regularly been excoriated by MPs for their failure to check customers' financial histories rigorously before offering credit, yet they have still failed to take effective action. And the real concern is that, like policemen, those drowning in debt are getting younger.

Lenders love to trot out the line about "lending responsibly" but the sums they rake in from penalty fees and fines suggest that irresponsible customers are actually better for their bottom line.

We're now at a stage where young adults willingly turn to the courts to set themselves free from debt. While we can't know if everybody who applies for bankruptcy has worked through the alternatives, it's to be hoped that their decision was not arrived at lightly.

Declaring yourself bankrupt is tantamount to waving the white flag over your personal finances. It's nothing less than surrender to a court, where the official receiver is pretty much free to do as he pleases with any assets - including your home - and marshal a chunk of your monthly take-home pay into repayment plans. Your credit record is stained for six years, making it hard to get a mortgage or credit. If you do, expect to pay through the nose.

To be fair, bankruptcy can offer a lifeline - particularly if you have no assets - but it's one you should grab only when there is absolutely nothing else is available.

s.dunn@independent.co.uk

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Sport
sportGareth Bale, Carl Froch and Kelly Gallagher also in the mix for award
News
Japan's Suntory Beverage & Food has bought GlaxoSmithKline's Lucozade and Ribena
news
News
A tongue-eating louse (not the one Mr Poli found)
newsParasitic louse appeared inside unfilleted sea bass
News
The illusionist believes hypnotism helped him to deal with the lack of control he felt growing up
people'It’s not that people react badly to it – they really don't care'
PROMOTED VIDEO
News
peopleJack Monroe accuses David Cameron of 'misty-eyed rhetoric'
News
Tana Ramsay gave evidence in a legal action in which her husband, Gordon, is accusing her father, Christopher Hutcheson, of using a ghost writer machine to “forge” his signature
peopleTana Ramsay said alleged discovery was 'extremely distressing'
Arts and Entertainment
Robin Windsor and Aljaz Skorjanec rehearse their same-sex dance together on Strictly Come Dancing
TV
Money
Anyone over the age of 40 seeking a loan with a standard term of 25 years will be borrowing beyond a normal retirement age of 65, and is liable to find their options restricted
propertyAnd it's even worse if you're 40
Arts and Entertainment
Perhaps longest awaited is the adaptation of Jack Kerouac’s On the Road with Brazil’s Walter Salles directing and Sam Riley, Kristen Stewart and Viggo Mortensen as the Beat-era outsiders
books
Arts and Entertainment
theatreSinger to join cast of his Broadway show after The Last Ship flounders at the box office
Life and Style
fashion'To start singing with Pharrell is not that bad, no?'
News
news
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Argyll Scott International: Risk Assurance Manager

    Negotiable: Argyll Scott International: Hi All, I'm currently recruiting for t...

    Argyll Scott International: Business Analyst - MGA - London Market - Insurance Broker

    £50000 - £60000 per annum + benefits: Argyll Scott International: A Business A...

    Ashdown Group: PR, Marketing & Events Executive - Southwark, London - £35,000

    £30000 - £35000 per annum + benefits: Ashdown Group: PR Marketing & Events Exe...

    Selby Jennings: C++ Developer – Hedge Fund – New York

    $80000 - $110000 per annum, Benefits: Bonus and Employee Investment Scheme: Se...

    Day In a Page

    In a world of Saudi bullying, right-wing Israeli ministers and the twilight of Obama, Iran is looking like a possible policeman of the Gulf

    Iran is shifting from pariah to possible future policeman of the Gulf

    Robert Fisk on our crisis with Iran
    The young are the new poor: A third of young people pushed into poverty

    The young are the new poor

    Sharp increase in the number of under-25s living in poverty
    Greens on the march: ‘We could be on the edge of something very big’

    Greens on the march

    ‘We could be on the edge of something very big’
    Revealed: the case against Bill Cosby - through the stories of his accusers

    Revealed: the case against Bill Cosby

    Through the stories of his accusers
    Why are words like 'mongol' and 'mongoloid' still bandied about as insults?

    The Meaning of Mongol

    Why are the words 'mongol' and 'mongoloid' still bandied about as insults?
    Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

    Kenyans still waiting for justice over Mau Mau uprising

    Thousands join class action over Britain's role in the emergency
    Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

    The last Christians in Iraq

    After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
    Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Britain braced for Black Friday
    Bill Cosby's persona goes from America's dad to date-rape drugs

    From America's dad to date-rape drugs

    Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
    Clare Balding: 'Women's sport is kicking off at last'

    Clare Balding: 'Women's sport is kicking off at last'

    As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
    Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

    Oh come, all ye multi-faithful

    The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
    Dr Charles Heatley: The GP off to do battle in the war against Ebola

    The GP off to do battle in the war against Ebola

    Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
    Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

    Flogging vlogging

    First video bloggers conquered YouTube. Now they want us to buy their books
    Saturday Night Live vs The Daily Show: US channels wage comedy star wars

    Saturday Night Live vs The Daily Show

    US channels wage comedy star wars
    When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

    When is a wine made in Piedmont not a Piemonte wine?

    When EU rules make Italian vineyards invisible