New research shows that there is an increasing willingness to turn to bankruptcy and Individual Voluntary Arrangements (IVAs) as 1.7m adults are struggling to pay their debts.
The report by debt consultancy Thomas Charles says that 13 percent of those interviewed said they were ‘quite likely’, ‘very likely’ or ‘certain’ to declare themselves bankrupt or take out an IVA. Women, divorcees, 25-34 year olds and people living in Scotland are most at risk of insolvency.
Overspending was given as the top reason for debt, confirming fears that public attitudes to spending are at the core of Britain’s increasing personal debt levels, which last year reached the £1 trillion mark.
James Falla, Director of the Thomas Charles, says: “The rise of the ‘credit junkie’ phenomenon and the “spend, spend, spend” culture is a long term issue. It needs addressing at grass roots level.”
The research conducted by YouGov shows that nearly 20% of the adult population, around eight million, have unsecured debts of £10,000 or more through credit cards, personal and student loans, hire purchase and overdrafts.
There are fears that bankruptcy is now seen as an easy way out by some debtors after sanctions were eased last year.
John Verrill, chief executive of the Association for Business Recovery Professionals, thinks that this has contributed to the rising numbers of insolvencies: “In truth, there is little incentive for consumers to behave responsibly.”
John Tribe of the Centre for Insolvency Law and Practice at Kingstone University disagrees: "Don't forget you have at least nine years of credit history problem after a bankruptcy, so getting a morgage would be extremely difficult, getting any form of loan would be difficult.
"Post your discharge you'd still be making income payments orders and you'd have the stigma as well of being a bankrupt."
RELATED INTERNET LINKS:
Thomas Charles Debt Consultancy
The Association for Business Recovery Professionals
