Bankruptcy Figures Rise
An increasing number of people appear to be struggling to manage their finances, new research shows.
In figures released today (February 15th) by the Ministry of Justice, it is suggested that the level of Britons wishing to file for bankruptcy reached a record high over the course of last year. During 2007, 53,114 consumers petitioned in court to be made bankrupt, an increase from the 52,717 recorded in 2006. Furthermore, last year’s statistics are more than twice those noted in 2003. Overall, some 73,270 individual petitions for bankruptcy were submitted to courts in 2007, with about three out of four of these cases from people being proactive in initiating this method of insolvency.
Due to such rising numbers of people opting for bankruptcy it is possible that more consumers are struggling to meet the various demands on their spending such as personal loans, credit and store cards, mortgage payments and household bills.
On the other hand, less creditors are filing for debtors to become bankrupt. The ministry revealed that, over the course of 2007, the proportion of bankruptcies requested by such professionals stood at 20,156, a fall of over 700 from figures recorded in the previous year.
With this in mind it appears that people from Humberside are coming under particular financial pressure, with the level of bankruptcies in the region rising by five per cent over the quarter. It was also indicated those in the Greater Grimsby area choosing this method of insolvency have gone up by 23 per cent.
In addition, the study showed a drop in bankruptcy petitions as the year closed. During the last three months of 2007, the number of creditors requesting people to be made bankrupt stood at 4,614, a fall of 11 per cent from the same period in 2006. Meanwhile, an estimated 11,703 people applied for bankruptcy themselves across the country between October and December, down by ten per cent from the previous year.
Reporting on the figures, Mike Gerrard, head of personal insolvency at accountancy firm Grant Thornton, told the Times: “The perception is that it is now easier to go bankrupt because it will be discharged after one year, but this shorter time frame doesn’t change the fact that your assets, for example, your house, are still up for grabs if you declare yourself bankrupt. Those who go bankrupt will also have to deal with their credit rating being shot to pieces for years to come.”
Indeed, choosing to file for bankruptcy could damage a credit report. This, in turn, could impair consumers’ access to cheap loans and other forms of competitively-priced borrowing in the future.
Those wishing to avoid the negative effects insolvency can bring may wish to apply for a bad credit loan. Such a loan may be of particular assistance to those who in the past have struggled with their money management but are confident that they will now be able to meet demands for repayment. And following on from making payments on a bad credit loan, borrowers may be able to repair their financial report. In recent weeks Equifax advised graduates looking to enter a career which involves money to first take out a copy of their credit report to check for any discrepancies.
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