Financial News: Individual Bankruptcy

30 November -0001

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The majority of individuals that file for bankruptcy are under the age of 30, are in full-time employment, borrow heavily on credit cards live for today buying whatever they want, when ever they want rather than living within thier income says a report from the accountancy company PKF.

Further breakdown in the age groups reveals that almost 60 per cent of recent personal insolvency cases involved people who are in their 20s with debts exceeding £60,000.

Though carried out in scotland the researchers are quite certain that the same statistics will apply to the rest of the UK, indeed they estimate the problem to be more acute in England and Wales.

The main culprit is soaring lifestyle expectations and the refusal of this age group to accept that they have to achieve a set standard of living regardless of income. Young people are buying up anything new that comes on the market, and are funding their purchases through credit.

Many people seeking financial advice are unaware of the amounts they owe, often running with multiple credit cards. This is why the government is coming under increasing pressure to make credit card companies more accountable, particularly for the more vulnerable.

Previous studies have shown that people shopping with a credit card will spend up to eight times more than when making cash purchases.

Government figures show a sharp rise in the number of individual insolvencies to more than 13,000 between October and December, up by more than 35 per cent on the same period in 2003. Personal bankruptcies accounted for 9,803, an increase of nearly a third. There are also calls for budgeting and money management to be taught in schools raising awareness from an earlier age.

The average owed by an individual seeking advice from the Consumer Credit Counselling Service, a debt-advice charity, is £27,000, with the debtor aged between 25 and 34, have a mortgage, a young family and be in a relationship, which mirrors the report findings.

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