Past Articles for the Bankruptcy Category

An average British consumer has an unsecured debt management burden worth close to £4,900, according to the latest figures compiled by Credit Action.

Borrowings secured through retail or motor finance deals, bank account overdrafts, credit cards or unsecured personal loans are now worth thousands of pounds for millions of people.

In fact, the charity reports that one person around the country is declared bankrupt or insolvent every four minutes and when mortgage arrears are included the typical debt level is almost £58,000 per household.

House prices are falling by around £65 each day that passes, while 11.8 million mortgage holders around the country have outstanding arrears worth close to £102,500.

A statement from Credit Action said: “Britain’s interest repayments have soared to £94 billion in the last 12 months.

“The average interest paid by each household on their total debt is approximately £3,774 each year which has increased £300 in the last 12 months.”

Moneysupermarket.com claimed recently that July could be particularly painful for thousands of British borrowers whose fixed-rate mortgage deals are about to end.

By Dan Mather

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Former pop star and reality TV regular Kerry Katona could face bankruptcy if she fails to resolve her current financial difficulties, according to reports.

The 27-year-old was told during legal proceedings at the high court recently that unless she paid off her outstanding tax bill she would likely be obliged to declare bankruptcy.

According to MSN UK, the former member of the pop group Atomic Kitten has an unpaid tax bill worth close to £420,000 and has been unable to settle it because of what her lawyer Luke Harris called “changed circumstances”.

“She’s also strenuously seeking to remortgage her properties. But if the money comes in there is no need [for further action]. I would ask for one final indulgence by the court,” said Mr Harris.

Figures released by the Credit Action charity earlier this month suggested that one person in the UK is declared insolvent or bankrupt every four minutes.

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As many as one in three British consumers have confessed that hey are seriously concerned about the current state of the UK economy, it has emerged.

Figures from the British Retail Consortium (BRC) show that a record number of people around the country are feeling pessimistic about the economy, with rising inflation and falling property prices cited as major causes.

The struggle many borrowers are facing in their efforts to become debt free are also thought to have added to the negative sentiment in the UK and a fifth of those polled said they now have no spare cash at all.

“It’s clear we are seeing the effects of customers’ concerns about the future and about their own levels of debt,” said the BRC’s director general Stephen Robertson

A recent report from the estate agents Chasterton has indicated that the East Midlands was the only region of the UK to see an increase in average property prices over the course of last month.

Written by Davina Willis

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A warning has been issued by the Office of Fair Trading (OFT) over the growing number of businesses trying to exploit the financial vulnerability of insolvent individuals around the country.

The OFT reports that a number of companies have been identifying people who have entered an Individual Voluntary Arrangement (IVA) and trying to entice them into what is often an unfavourable bankruptcy deal.

According to the OFT, marketing efforts have been targeting people who are already insolvent and whose financial position is likely to be made worse if they break the terms of their existing debt management plan.

Ray Watson, OFT director for consumer credit, said: “Tackling companies who are engaging in unfair business practices by targeting vulnerable consumers with misleading advice and information, particularly if it leads to consumers becoming more over-indebted, is a key priority for the OFT.”

Data from Credit Action has shown that one person in the UK is declared insolvent or bankrupt every four minutes.

Written by Dan Mather

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The level of personal debt among UK consumers is rising by just over £300 million every day, according to the latest figures from Credit Action.

Collectively, British borrowers pay out close to £258 million in interest each day and the average credit consumer has a debt management mountain - excluding mortgages - worth around £9,220, the charity reports.

The typical household pays out £3,790 every year to service the interest on the loans and credit card deals they have taken out, which is an increase of £343 compared with 12 months ago.

Furthermore, around 123 properties are repossessed across the country on a daily basis and one person declares themselves insolvent or bankrupt every four minutes.

“Britain’s interest repayments have soared to £94.3 billion in the last 12 months,” a statement from Credit Action explained.

A Prudential report last week suggested that money problems are the number one concern for families and individuals across the UK.

Written Giles Stevenson

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Bankruptcy is regarded as an easy option for many people who fail to fully consider the impact of such a decision, it has been suggested.

“They don’t want to listen to the implications, they just want to go ahead and do it,” Martin Lord, manager of the Citizen’s Advice Bureau in Northampton, told the Northampton Chronicle.

His announcement follows the revelation that bankruptcy rates have shot up by 20 per cent in Northampton in the first quarter of 2008, as the credit crunch has taken hold.

Mr Lord told the paper that the bankruptcy figures were unsurprising.

“People don’t want to think about it seriously and bankruptcy isn’t the bogeyman it used to be,” he commented.

However, the implications of bankruptcy include having bank accounts frozen and even the possibility of losing your home, warned Mr Lord.

Bankruptcy rates are currently on the rise across the UK. Residents in the north-east have been particularly affected, with rates increasing by up to 34 per cent in the first quarter of 2008.

These figures have grown by three times the UK national average in just three months, the Northern Echo reported.

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The north-east has seen a 34 per cent rise in the number of people filing for bankruptcy in the first quarter of 2008.

This is according to analysis by global services firm KPMG, the north-east’s bankruptcy figures have increased by three times the UK average between January and March, reports the Northern Echo.

Sunderland - at 77 per cent - and Newcastle with 31 per cent experienced the highest number of people filing for bankruptcy.

Commenting to the paper on the bankruptcy figures, Paul Bateman, head of personal insolvency in the North of England for KPMG, said Britons are struggling with higher mortgage, fuel and food costs.

He said many people will take formal debt management steps in the coming months and drive up personal insolvencies.

“Many others may be able to take advantage of informal arrangements and tighter budgeting to avoid the worst effects of over-indebtedness,” Mr Bateman added.

His advice to people wishing to clear debt is “to take advice on all the options”.

Earlier this month uSwitch warned that if current insolvency rates continue throughout 2008, this year could see nearly 104,000 casualties in total.

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The number of people facing County Court Judgments (CCJs)due to the extent of their debt management woes has been rising significantly across the UK in recent months.

Certain areas of the country have been particularly hard hit in this respect and Shoreditch has seen a 154 per cent rise in the number of CCJs over the course of the past 12 months.

Many parts of England and Wales have also seen notable increases in the scale of court actions resulting from creditors being left unable to regain money they are owed.

Reflecting on the latest figures from the register of CCJs, credit reference firm Callcredit aimed to highlight the importance of seeking out appropriate debt advice for anyone in financial trouble.

“If circumstances are becoming unmanageable, borrowers should contact their lender or an organisation such as the Consumer Credit Counselling Service (CCCS) to obtain independent advice on the best way forward,” said Owen Roberts from Callcredit.

Earlier this week, the CCCS urged mortgage lenders to consider repossession claims as an option of last resort.

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The true extent of the debt problems facing consumers across Britain is being hidden by the official insolvency figures, it has been claimed.

According to the Association of Business Recovery Professionals (R3), the data on insolvency is not representative of the country’s financial problems because it does not take account of the people who enter a debt management plan.

There are thought to be tens of thousands of Britons entering a debt management plan each year but they are not included into the official Insolvency Service figures, R3 explains.

Reflecting on the scale of the UK’s debt woes, R3’s president Nick O’Reilly said that the worst is yet to come and noted that the vast majority of his members agree with this prediction.

Meanwhile, Anna Sofat, founder of the financial planning firm Addidi Wealth, suggested that the number of Britons being declared bankruptcy is likely to continue to increase over the course of 2008.

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More than 25,000 people from England and Wales entered insolvency over the course of the first three months of this year, according to the latest official data.

The figures show that there were 15,651 cases of bankruptcy and 9,614 reported instances of people entering an Individual Voluntary Arrangement (IVA) by way of a debt solution.

Overall, bankruptcy levels were roughly the same in the first quarter of this year as the final quarter of 2007 but IVA rates increased by 4.3 per cent on the same comparative basis.

The Insolvency Service reports that the latest data represent a reversal of the trend during the past year that saw insolvency rates falling on a quarterly basis.

In addition to insolvency, the prospect of repossession is becoming increasingly real for many British consumers, with the Centre for Economics and Business Research forecasting recently that 25 per cent more homes will be lost in the UK this year than in 2007.

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