Insolvency is not an easy option

THURSDAY, SEPTEMBER 28, 2006

Young people are increasingly turning to insolvency as an easy option, a credit checking service has warned.

According to Callcredit, rising numbers of students are declaring insolvency in the belief that they can wipe the financial slate clean.

Insolvency figures appear to bear this out: 899 students declared themselves bankrupt in 2005, compared to just eight in 1992.

"Bankruptcy is not an easy option and changes in the law in 2004 mean that any student who went down this route would still be liable for their student loan," warned Mel Mitchley, industry relations director at Callcredit.

"And quite apart from this, bankruptcy has serious consequences in terms of current and future assets. Any hopes of future home ownership may be ruined and even something as simple as opening a bank account may become difficult," she added.

The UK's debt culture has been described as "unstable" this week by the chief executive of IFA Promotion, David Elms, who pointed out that for every pound saved in the second quarter of 2006, 48 pence was borrowed.

These figures appear to suggest that the numbers of people currently at risk of insolvency are as high as ever.