Insolvency figures for the first three months of this year indicate that we are likely soon to be known as Bankrupt Britain, with the number of personal bankruptcies running at over 19000 during this time, an increase of nearly 24% over the same period last year. This figure does not include those that have proposed an Individual Voluntary Arrangement (IVA) which, at nearly 11000, was up 3.6% on the same period as well. On top of this nearly 5000 companies went into liquidation, over 50% up on the same period last year!
According to research by accountants Grant Thornton, it takes most people, on average, eight months from when they first become aware they have a debt problem before they seek advice. Typically, it then takes a further five weeks before they take action on the advice they receive. If this is the case then those that first experienced serious debt issues towards the end of last year have yet to impact on the insolvency figures. This research, coupled with my experience, tells me that the insolvency figures (bankruptcies and IVAs combined) could see a steady rise over the next two to three years before they begin to level out
Many will say that people have an outright duty to repay their creditors. Arguably however, if creditors adopted a more supportive approach and stopped harassing the consumer with relentless telephone calls and letters demanding payment and listened to the borrower, then there might be less pressure to petition for bankruptcy.
One also has to question the government’s stance in helping individuals resolve their debt issues when they increased the cost of petitioning for bankruptcy from £495 to £510 from the 6th April this year. This increase was sneaked in with little publicity and has put further pressure on those individuals who cannot afford to go bankrupt, especially where this was the only option left to resolve their debt issues.
There are those that are against individuals being able to opt for bankruptcy as they see it as an easy way out. Perhaps they should remember though that it is not a crime to be in debt (the last debtors’ prison closed back in 1869) and that previous governments have introduced legislation to assist consumers to deal with unsecured creditors. I know of many who have moved on from bankruptcy to rebuild their lives and begin to pay their way again, contributing to taxes and national insurance.
Debt problems can become all consuming and take over one’s life. With the support of families and friends however, it is clear that once back in control of finances, life can begin again.
With bankruptcy figures being the highest since records began in 1960 one has to question the government’s thinking in increasing the petitioning cost per person to £510, especially at a time when unemployment is forecast to reach three million by the end of 2009 and insolvency figures are currently at record levels and predicted to increase. Is this government only interested in helping the banks and the car industry but not Joe Public, the consumer?
