Newspaper article The Journal (Newcastle, England)

Gloomy Picture of Debt-Ridden Nation; Fears over Rising Insolvency, Evictions

Newspaper article The Journal (Newcastle, England)

Gloomy Picture of Debt-Ridden Nation; Fears over Rising Insolvency, Evictions

Article excerpt

Byline: By Matt Williams

RECORD insolvency figures and a rise in the number of homeowners facing eviction yesterday provided a gloomy picture of a debt ridden nation.

The Government's Insolvency Service revealed that over the summer a total of 27,644 people in England and Wales went bankrupt or entered an individual voluntary arrangement.

The figure represented a jump of 55% on the same period in 2005, raising concerns that the UK debt crisis is spiraling out of control.

Predictions that the total number of people going insolvent in 2006 will go past the 100,000 mark for the first time now look almost certain to be fulfilled.

Debt experts said the hike in the number of insolvencies was down to a combination of factors.

Easier access to credit coupled with a society prone to "wanton indebtedness" has seen more and more people using credit cards or loans to supplement a lifestyle they simply cannot afford, it was suggested. Stephen Rose, director of Debt Advice Bureau, said there was also evidence of serial debt consolidation with homeowners remortgaging their property to the hilt.

Breaking the figures down reveals that while bankruptcies have seen a relatively small increase quarter on quarter, the number of people opting for IVAs - which allow debtors and creditors to come to a formal arrangement - have rocketed.

Figures for July to September were up almost 10% on the previous quarter to 12,228 - narrowing the gap with the number of bankruptcies.

Year on year analysis shows that the number of IVAs being taken out has more than doubled.

It has heightened fears that too many people are being pushed into IVAs as a result of aggressive advertising by debt management companies and IVA specialists.

According to the Consumer Credit Counselling Service, bankruptcies are suitable for five times as many people with debt problems than IVAs. But many experts are now predicting that the two forms of insolvency will soon reach a parity. …

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