Personal Bankruptcies May Be Up, But Overall Levels Still Low - Debtors Need Appropriate Assistance, Not One Size Fits All Solutions
Even though the total numbers of people facing problem debt have been rising, the overall number of those individuals who are declaring themselves bankrupt is a very small minority of the UK population. Instead of taking an alarmist reaction to the number of people who are bankrupt, or who are seeking debt relief through Individual Voluntary Arrangements, or IVAs, greater focus needs to be placed on preserving the available assistance for those facing debt problems and providing the correct solutions to those reaching out for help.
RUNCORN, England (PRWEB) August 14, 2006
Personal bankruptcy and insolvency levels have been rising in recent years as some consumers have found themselves facing large debts they cannot repay. The increase can be attributed to more liberal lending practices by creditors and an increased demand for credit from individuals. But even though the total numbers of people facing problem debt have been rising, the overall number of those individuals who are declaring themselves bankrupt is a very small minority of the UK population.
According to Steve Rhode, chairman of the financial crisis centre Myvesta UK, the number of individuals declaring themselves bankrupt in 2005 was only one-tenth of one per cent of the UK population who are eligible to apply for and receive credit. Mr Rhode said:
"We often hear how there is a growing national crisis of personal bankruptcies across the UK, but in reality the number of people declaring themselves bankrupt is a tiny percentage of adults who can use credit. To put things into perspective, about 50,000 people were bankrupt in 2005, yet around 2.5 million people in the UK were victims of violent crime. Personal debt is certainly a very serious problem in the UK, but the sky is not falling because the number of personal bankruptcies has been going up in recent years."
Rhode said that instead of taking an alarmist reaction to the number of people who are bankrupt, or who are seeking debt relief through Individual Voluntary Arrangements, or IVAs, greater focus needs to be placed on preserving the available assistance for those facing debt problems and providing the correct solutions to those reaching out for help. Mr Rhode said: "The UK has a very advanced and fair assistance mechanism for people facing problem debt in the IVA. IVAs allow for individuals to fairly and equitably repay their creditors and move on with their life in a positive way. It is a solution the UK should be proud to be able to offer as other countries such as the USA do not allow for that kind of assistance. But as great a tool IVAs can be, they're not for everyone."
"Some individuals clearly are not good candidates for entering into an IVA, in these cases bankruptcy, remortgaging or income maximisation may be more appropriate solutions. At Myvesta we help people on our free advice line and online chat facilities understand all their options to make sure the solution they choose is the most appropriate one," Mr Rhode added.
Myvesta UK's free advice line and online chat room can be accessed by calling 0800 1116 885 or visiting Myvesta. org. uk online.
Myvesta UK is dedicated to helping people create healthy financial lives. The organisation provides a wide range of materials and services to inspire and inform people so that they can break down their barriers to financial and personal success. For more information visit Myvesta. org. uk online.
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