Bankruptcy Situation Will Worsen Further - Debt Help Site

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The Debt Help Site warns that bankruptcy will continue to rise in the UK following the announcement of record figures for the fourth quarter of 2005.

Firstly, credit is readily available to practically everyone

Record bankruptcy figures for the fourth quarter of 2005 have been announced, and the Debt Help Site is predicting the situation will get even worse.

The Official Insolvency Statistics reveal that there were 13,501 bankruptcies in the fourth quarter of last year, 11% up on the previous quarter and 38% up on the corresponding period of 2004.

This upward trend is also reflected in Individual Voluntary Arrangements, or IVAs.

An IVA is an alternative to bankruptcy whereby the debtor reaches agreement with their creditors to pay off a reduced debt over a five-year period.

In the fourth quarter of 2005, 6,960 IVAs were registered, which is 24% up on the third quarter of 2005 and 117% up on the fourth quarter of 2004.

However, the Debt Help Site warns that these figures are just the tip of the iceberg and that for every individual who enters into bankruptcy or an IVA, there are many more who, while technically solvent, are suffering under the burden of huge debts.

Terry Galvin, editor of the Debt Help Site, says the reasons for the high level of debt and bankruptcy is manifold.

"Firstly, credit is readily available to practically everyone," says Galvin. "Crucially, this is linked to a 'want now, buy now, pay later' attitude prevalent among consumers who would rather be indebted than save for luxury purchases."

Another factor is changing attitudes towards bankruptcy, as Galvin explains:

"Following the Enterprise Act 2002, which decreased the period in which it is possible to be discharged from bankruptcy, people increasingly see going bankrupt as an easy option.

"Of course, this isn't the case but generally there is less of a stigma associated with bankruptcy as a result so more people are willing to take that option."

Ominously, Galvin believes the problem will get much worse.

He said: "We are predicting at least 100,000 bankruptcies in 2006.

"You have to remember, this is occurring in a period of relative economic stability, with low interest rates and high employment. If either of those economic factors deteriorates, we could be facing a real crisis."

For more information on bankruptcy, IVA, debt problems and debt solutions, visit http://www.debthelpsite.net

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