Debt & Bankruptcy Issues in the UK

We've already discussed in a recent blog article on the tragedy of debt related suicides haunting the UK.

At the same time, it appears that many Britons are becoming increasingly complacent about their debts, according to a recent survey.

Credit Expert asked 2000 adults in the UK about the level of their debts and their feelings towards being in debt. Three quarters of borrowers were reportedly "comfortable with their debts". Borrowers in the Midlands and Wales were less likely to worry about their debts, and reportedly more confident about their personal finances.

In the UK as a whole, just under of a third of people said they expected their debt level to decrease over the coming three months, while 20% had managed to reduce their debts in the last 6 months. Interestingly, only 13% expected that their level of borrowing would increase in the next six months.

Credit Expert's managing director Jim Hodgkins said it was important for consumers to be "constantly aware" of their debt situation in order to be alert to changes that could affect their ability to borrow in the future.

It's been reported that a person with £ 130,000 worth of credit card debts has taken his own life. The man from Wiltshire faced the prospect of losing his home after running up the massive debts over 5 years on 22 different credit cards.

Apparently, 17 people in the UK have committed suicide in the last three years, and their deaths were directly attributed to debt problems.

It's well known that debt problems can affect one's physical and mental well-being. Many people in debt don't discuss their financial problems with their partners. According to a survey released in February by MyCallCredit, as many as one in seven people wouldn't discuss their debt problems with their partners unless asked directly about them.

If you can't yet face up to your debt problems, there is debt help and advice available online. If you prefer the anonymity of the internet to start with, then you can find a debt discussion forum by doing a Google search for "debt problems forum UK" for example but without the quotes.

When you are ready to confront your financial problems, please remember that Accuma's specialist debt advice is free and non-obligatory.

After the credit boom of the last 10 years, a million people in the UK are edging close to insolvency according to research by YouGov.

There are close to 8 million adults in the UK with unsecured debts of over £10,000. One in ten of them struggle to pay their debts every month. Many more are struggling "most months" or "quite frequently" to meet debt repayments.

Thirteen percent – just over a million said that their debt problems had become so severe that they were close to insolvency and "likely" to "certain" to either declare themselves bankrupt or take out an IVA (Individual Voluntary Arrangement). Another one in ten had sought debt advice from an Insolvency Practitioner.

It's a certainly a bleak picture in the UK, coming on top of government statistics released in May indicating that over 23,000 individuals in the UK were insolvent in the first quarter of 2006. In fact many experts believe that this year will see the largest number of insolvencies since records began.

According to the DTI figures most people declared themselves bankrupt, whilst an increasing minority opted to avoid bankruptcy by taking out an IVA. In an IVA, debtors hope to negotiate with their creditors to pay off a reduced sum of debt over a five year period.

For more details of the advantages and disadvantages of an IVA, contact Accuma for professional debt advice.

If you believe a recent survey by the Royal Bank of Scotland, 23% of people never open their bank statements. If you think of the number of people in the UK with a current account, that corresponds to over 7 million bank statements going straight into the bin every month.

It's not surprising then that there are so many debt-related problems in the UK. It's not just the scale of personal debt, exceeding 1.1 trillion pounds, there's also a perceived problem of people not taking control of their personal finances.

For example it was widely reported in that one in five people were being hit by late loan repayment charges during 2005. That meant that nearly £500 million was spent on penalties for late payments of credit cards, overdrafts, though some were paying penalties for early repayment of their debts.

At that time the figures were blamed on people's hectic lifestyles and people not making time to keep their personal finances in order, especially with respect to their debts.

It seems that the trend is continuing well into 2006.