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Debt - Debt Ridden Brits Claim Bankruptcy - 07/05/2008

A new study by online credit information provider Equifax has revealed that more and more Brits are claiming bankruptcy as they struggle to cope with their debts.

The study claims that 130,000 people will be declared insolvent by the end of this year, a 30 per cent rise since last year. This is a very large rise in the space of just one year and Equifax are concerned that people are not aware of the long term drawbacks to bankruptcy.

Another study by Insolvency Service has revealed that many consumers who claimed bankruptcy in 2007 did so without the advice of a financial advisor, creditor or any industry official.

Customers are warned that while bankruptcy may seem like the solution at the time, it should only be considered as a last resort and other avenues should be fully explored before taking that route.

Debt management plans should always be the first option when debts seem out of control, advises Neil Munroe, external affairs director for Equifax:

“It’s important to consider these other options, because if an individual is declared bankrupt this fact will stay on their credit file for 6 years seriously affecting their ability to get credit, despite the possibility of bankruptcy discharged after one year,” he explains.

Ann Robinson, Director of consumer policy at uSwitch.com agrees with Mr Munroe:

“It's worrying that so many people are resorting to individual insolvencies, be it an IVA or bankruptcy, to resolve their personal debt problems. These measures should always be the last resort for anyone with financial problems as they have a very serious impact on people's credit histories and their ability to borrow in the future. In the case of bankruptcy, it could also impact on employment prospects.”

“We would strongly advise that individuals take good advice before declaring themselves bankrupt” confirmed Neil Munroe.