The Department of Trade and Industry might not know why bankruptcy and IVA levels are so high but those working in the debt help industry do
(PRWEB) November 5, 2005
The number of personal bankruptcies has gone up by 32 percent and IVAs by 98 percent, the DTI announced on Friday. In the third quarter of 2005, 12,256 people went bankrupt and 5,754 entered into an IVA (Individual Voluntary Arrangement).
And the DTI doesn't know why this is happening. But The Debt Help Site does...
"The Department of Trade and Industry might not know why bankruptcy and IVA levels are so high but those working in the debt help industry do," says Terry Galvin, editor of The Debt Help Site.
The DTI wants to explain why so many people can't pay their debts. They have commissioned surveys, made models of business start-up rates, spoken to Bankers about their lending policies and written reports with lots of colourful graphs. Who knows how much all this cost but all they can say is that "no single factor can conclusively be proven to be driving this trend."
We could have saved them a lot of money. All they had to do was ask the professionals working in the front line of bankruptcy, IVAs and the debt help world. The numbers in bankruptcy and in an IVA have got out of control for three main reasons, each compounding the other. The first two causes are:
- Easy credit from mortgages, loans, credit cards and store cards
- More relaxed attitudes to debt and bankruptcy
With this background the law was changed and The Enterprise Act 2002 made it possible to be discharged from bankruptcy after less than a year. The impression given, although not intended, is that bankruptcy is now an easier option.
This doesn't only affect the bankruptcy process but, via the media, it affects the mindset of those all along the already slippery road that starts with easy credit and not enough worry about the consequences of letting debt get out of control. As this is written, a bankrupt is talking on BBC News At One, saying "bankruptcy is not that bad."
The Enterprise Act was a bit like spilling oil onto that busy road of already out-of-control cars and the results were inevitable - more bankruptcy and more IVAs.
About these increases in bankruptcy and IVA numbers, Galvinfrom The Debt Help Site says, "I'm not surprised by the increases. We all knew this was coming. People are starting to think that bankruptcy is an easy option, but it's not. Of course, many of them are sensibly given the option of an IVA but much better would be to not get insolvent in the first place."