Past Articles for the Bankruptcy Category

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

Share This

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

Share This

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.

Share This

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.

Share This

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.

Share This

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.

Share This

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.

Share This

The lack of credit availability will see bankruptcy levels rise across the UK in months to come, according to one expert.

Anna Sofat, founder of financial management firm Addidi Wealth, is convinced that many people with debt problems will be left with little option but to file for bankruptcy when they see their loan applications rejected.

Credit is becoming less freely available and coupled with rises in the cost of living more and more people will come to view bankruptcy as their only method of becoming debt free, she suggested.

“Last year there were already more people declaring themselves bankrupt or having voluntary arrangements with their debtors and I think that will increase this year,” said Ms Sofat.

A report from the TDX Group recently estimated that “problem” personal debt in the UK is now worth in excess of £25 billion and hundreds of thousands of people are finding it almost impossible to clear their debts.

Share This

The scale of the UK’s personal debt management burden has increased by close to £113 billion over the course of the past year, according to the latest figures.

Data collected by the Credit Action charity has revealed that individuals around the country owe a collective total of almost £1,430 billion and an additional £8.2 billion was borrowed over the course of March 2008.

There are now thought to be almost 11.8 million Britons with outstanding mortgage arrears, with the average outstanding sum topping £100,000.

Furthermore, the average British household pays out around £3,765 each year to service the interest on their debts, which is £340 more than was the case 12 months ago and 292 people are entering insolvency or bankruptcy each day.

Meanwhile the Centre for Economics and Business Research recently predicted that debt management problems will see 33,000 people lose their homes in the UK this year.

Share This

The serious problems affecting banking groups in the US and in the UK should act as a wake up call to consumers across the country, it has been claimed.

According to Callcredit, the recent collapse and emergency bail out of Bear Sterns should prompt people with debt management issues on both sides of the Atlantic to reassess their personal finances.

The credit reference company is convinced that the problems that have caused both Bear Sterns and Northern Rock in the UK to face disaster are bound to have a knock-on effect for the world economy and for all consumers.

“In an attempt to avoid debt, consumers need to move away from the ‘buy now, pay later’ attitude and move towards the ’save now, buy later’ mentality,” said Mel Mitchley, director of industry relations at Callcredit.

A report released last year by the Grant Thornton accountancy firm revealed that the UK’s personal debt is now worth more than its annual gross domestic product.

Share This