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More than a million heading toward bankruptcy says report

Thu, 3 Aug 2006 16:58:22 GMT

More than 1.1 million people are likely to seek bankruptcy protection or an Individual Voluntary Agreement (IVA) in the foreseeable future says new research.

The report found that 20 per cent of people with debts of £10,000 or more said that they were 'quite likely', 'very likely', or 'certain' to soon seek protection from their creditors.

The figure is up from 13 per cent in March when 13 per cent said that they were heading toward bankruptcy, said debt consultancy Thomas Charles.

"Our latest research shows that the problem is here to stay and is set to continue to grow," said Thomas Charles director James Falla.

"With eight million adults having unsecured debts of £10,000 and over, our research shows an enormous uptake of unsecured borrowing across all areas: credit cards, personal loans, student loans, hire purchase and overdrafts.

"This puts literally millions on the borderline."

The situation was compounded today with an increase in interest rates likely to push those at the most risk even deeper into the red.

Break-up linked to bankruptcy says report

Fri, 14 Jul 2006 17:00:39 GMT

A new survey has revealed a disturbing relationship between the UK's rising levels of debt and divorce.

The troubled finances of an ex-partner was found to be the underlying cause of unmanageable debt in 28 per cent of bankruptcy filings, said Debt Free Direct.

People going through a divorce were also a third more likely to file for bankruptcy than others.

"Typically, people in a relationship will take on debts in joint names, never believing that the relationship will end," said Debt Free Direct spokesman Derek Oakley.

"But when it does the effect of divorce or separation can seriously heighten the impact of the debt problem."

He added that the issue can be particularly distressing when an ex-partner is unaware of the debts and has taken no steps to minimise their exposure to the fall-out.

"For example, even after divorce, many couples still hold credit or store cards in joint names," said Mr Oakley.

"After separation it's important to advise the credit company to terminate the joint card.

"Unless you do this you could be pursued for payments on debt that your ex-partner has run up."

Women are more likely to be left with no option but filing for bankruptcy, with 14 per cent more women than men filing for insolvency protection.

Credit rating problem mortgage market expands

Wed, 5 Jul 2006 17:05:37 GMT

The number of mortgages tailored for people with credit rating problems has grown six times faster than the mainstream market in recent years say new figures.

The Council of Mortgage Lenders (CML) research showed that while just £1 billion was leant to people with county court judgements or other debt issues in 1996, this has now risen to £25 billion.

The number of deals open to those with credit rating problems has also vastly improved with a range of offers now rivalling the mainstream.

Maximum loan-to-value ratios have also increased and the punitive fees applied to "non-conforming" mortgages have declined.

Much of this is down to increased competition in the market, with the 30 specialist providers now operating more than twice the number in 2000.

The increased supply reflects growth in demand as personal debt increases and more people apply for county court judgements and bankruptcy.

"Extreme" debt cases double says charity

Fri, 23 Jun 2006 17:00:43 GMT

The number of people in the classified as struggling with "extreme" debt has doubled in the course of a year, the Consumer Credit Counselling Service (CCCS) has warned.

The number of people approaching the charity owing £100,000 or more in unsecured lending doubled from 1.4 to 2.7 per cent over 2005, it said.

The biggest increases in debt were found among the over-60s, said the CCCS, with average debt increasing 25 per cent to £33,568.

People aged between 40 and 59 remained in the worst financial state, however, with average unsecured borrowing of £33,456.

Young people were in a none too great financial state either, with the number of 18 to 24 year olds seeking financial help from CCCS up five per cent in recent years.

Their average borrowing has increased from £11,934 in 2003 to £15,079 this year.

"It's no surprise that debt levels are rising and that increasing numbers of people are getting into difficulty, but it is disheartening to discover that it is the older age groups whose debt is rising the fastest," said Stuart Glendinning of Moneysupermarket.

"It is undoubtedly the case that many unsecured loan providers have tightened their acceptance criteria in the last couple of years and this is making it harder for younger people, especially those who are not homeowners, to access money."

The number of people seeking bankruptcy protection has doubled in recent years.

Halifax attempts to repossess suicide father's home over £5,000

Wed, 15 Feb 2006 17:21:49 GMT

A father of two killed himself after a downward spiral of bad debt and finance problems eventually saw his home repossessed and his family evicted.

Ian Beech, 47, apparently washed down a handful of painkillers with a bottle of whisky before walking into the sea.

His corpse was discovered on a Norfolk beach on the same day as bailiffs were due to arrive for the family home.

His family says that his suicide is the end result of a new campaign by lenders to get tough on those who lapse on payments.

Mr Beech, a freelance electronics salesman, award winning photographer and sports car enthusiast with no history of mental illness, was in the process of remortgaging his home to cover his debts when Halifax moved to repossess.

"It was wicked the way Halifax put the pressure on. Ian only had a mortgage for around £99,000, yet the property was worth £180,000," Mr Beech's father, John, told the Daily Mail.

"He was four or five months behind on his repayments, but the Halifax would have got all its money back. The way they pursued him was just disgusting, inhumane. Ian was a dedicated family man and a loving father."

Mr Beech said in a suicide note that he hoped life insurance policies he had taken out would spare his family bankruptcy, not realising that many firms will not pay out for suicide.

Mr Beech's death is the latest of a string of suicides that has been linked to rising number of bankruptcy filings.

Bankruptcy levels bust records

Fri, 3 Feb 2006 17:39:56 GMT

Filings for personal bankruptcy increased to record levels during the final months of 2005, rising 57 per cent compared to the same period of the year before.

But even this figure was dwarfed by a new alternative to bankruptcy, Individual Voluntary Agreements, or IVAs, which rose by a staggering 117 per cent on 2004.

There were a total of 20,461 individual insolvencies in the last quarter of 2004.

The figures showed that "many people have borrowed to their limits", said Howard Archer of Global Insight.

Other figures released today have added to the gloomy picture. The Council of Mortgage Lenders (CML) said the numbers of repossessed properties increased 70 per cent in 2005, although this figure remains low by historic standards.

"As expected, arrears and possessions are increasing from what was a phenomenally low trough. Although the scale of increase is notable, the absolute numbers are still extremely small, and set to remain so," said CML director Michael Coogan.

"Now would be a good time for borrowers to review their financial commitments.

"Cutting unnecessary spending, ensuring you have a suitable mortgage deal, and taking out suitable insurance such as mortgage payment protection insurance could make the difference between coping and falling into trouble."

Banking code investigates credit practices

Wed, 11 Jan 2006 17:03:13 GMT

Some of the UK's largest finance providers could soon be facing clampdowns on the way they handle customers' credit ratings.

Banks, building societies and specialist lenders could face bans on lending to certain customers if they are found to be incorrectly handling customers at risk of bankruptcy.

The measures are being imposed in an attempt to ensure that institutions are not blindly pushing people into greater debt or disregarding risky credit ratings when awarding consolidation loans.

Finance industry watchdog the Banking Code Standards last year launched a probe into the factors that may be contributing to the UK's £1 trillion mountain of personal debt.

The inquiry has focussed on 12 of the country's biggest banks and credit card companies and the way that they assess each customer's credit rating when dealing with a request for an unsecured loan or credit card.

It is also believed to be concerned about banks' using bonuses and prizes to encourage their staff to sell loans and credit cards.

The board has announced that it is working with the banks to find a compromise solution to the problems it has found.