The song remains the same: don't go bankrupt

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The Independent Online

You either love or you hate George Michael and his music. I'll confess here that I've always been a fan, though since I grew up in the 1980s when the singer ruled the pop charts, I can blame my age as well as my taste in music.

You either love or you hate George Michael and his music. I'll confess here that I've always been a fan, though since I grew up in the 1980s when the singer ruled the pop charts, I can blame my age as well as my taste in music.

But I don't love the artist enough to pay an inflated price for his CDs.

So when his latest album, Patience, came out, I headed to one of my favourite spots to buy new chart music: Tesco. And there, racked up next to the fresh French bread, was an offer for the CD at £2 less than the Virgin store just 30 paces across the road.

Now, a couple of quid might seem a small sum to quibble over, but it represents a saving of nearly 20 per cent compared to rival shops and those margins add up when you buy a lot of CDs.

To be sure, supermarkets lack soul and cool next to an independent record shop or Virgin store, but you can count on them for one thing; they reward you for shopping around.

And this is certainly the case with simple financial products such as car insurance or term life cover, as our back page story shows. While they may not offer the most comprehensive policy or the lowest possible price, you can usually bank on these giant retailers for a cheap deal.

Kevin Carr, the senior technical adviser at independent financial adviser Lifesearch, points out that while you might get a life policy for a knockdown price in the supermarket, that's a pretty basic shopping list. Paying for financial advice will continue to offer more, he adds.

In the case of life cover, for example, writing your policy into trust will stop it bumping up your estate in the event of death and help reduce your inheritance tax bill. "This is not potatoes on the shelf," Mr Carr stresses.

While this may be the case, we have nothing to lose by scouring the market for the basic financial products that we all need. The millions who have travel insurance or a personal loan with their grocer have already felt the financial benefits of convenience shopping.

However, not every action aimed at improving your finances is to be welcomed, and firmly in this category sits declaring yourself bankrupt in a bid to rid yourself of debt. This is one of the most tortuous and far-reaching steps you can take - more so than buying a house - which is why there is such concern over changes in the law that seem to make it easier to walk away from this stain on your financial record.

For example, a reader has contacted the paper (see page 27) on hearing about the new rules. He owes thousands of pounds and is considering bankruptcy because he doesn't know where else to turn. More alarmingly, he reveals he is in his early 30s, an awfully young age at which to be contemplating personal insolvency.

Anecdotally, a 24-year-old teacher I know is labouring under a dead weight of debt with very little prospect of paying it back any time soon. Her hopes of buying a flat and a car have all but been extinguished and she can see nothing except years of indebtedness. She too has flirted with the idea of bankruptcy but remains wary of the stigma.

Frances Walker, of the Consumer Credit Counselling Service, warns that becoming bankrupt at such a young age would be "a terrible thing" and insists it should be the absolute last option.

If there was any doubt over whether such a move was an easy way out, let me remove it now. Bankruptcy will turn your life upside down. Everything you own, bar basic items such as clothing and furniture or tools for your job, will be surrendered to a court.

And since your credit record will be marked for six years, you can expect great difficulty in getting a mortgage or credit card.

If you have a home, just think about the possibility of losing it.

Of course, one can never truly appreciate how dire other people's personal finances really are, and there are plenty of cases where bankruptcy will offer a lifeline when nothing else is available. However, bankruptcy marks people. You could walk away with no debt in the end but that might be the only benefit you get.

Melanie Bien is away

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