en-us http://backend.userland.com/rss Your Friends @ Myvesta.org.uk (stever@myvesta.org) myvestaukblog_archive.html stever@myvesta.org 114841366699514497 A million people in the UK are on the brink of insolvency as the credit boom of the last decade has left borrowers struggling to repay their debts.

Research by YouGov has found that one in five of the adult population -- around 8 million people -- has unsecured debt of more than £10,000. Almost 10 per cent of these borrowers -- or three-quarters of a million people -- have problems repaying their debt every month while a further ten per cent struggle "most months" or "quite frequently".

Thirteen per cent said their debt problems had become so bad that they were "quite likely", "very likely" or "certain" to declare themselves bankrupt or take out an Individual Voluntary Arrangement (IVA). One in ten had already approached an insolvency practitioner.

The survey, which questioned 1,366 borrowers, found that people living in rented or council accommodation were most likely to become insolvent, followed by those earning less than £20,000 and divorcees. Borrowers in Scotland were more likely than the English or Welsh to seek insolvency.

Earlier this month the Department of Trade and Industry (DTI) reported that 23,251 people in England and Wales become insolvent in the first quarter of 2006, a 73 per cent increase from the same period a year earlier. The majority of debtors declared themselves bankrupt but almost 8,000 took out IVAs, an increasingly popular alternative to full bankruptcy.

IVAs allow debtors to stave off bankruptcy by coming to an agreement with creditors to pay off a percentage of their debts over a given period.

Collectively British consumers owe more than £1 trillion on mortgages, credit cards, loans and overdrafts. Earlier this month, Mervyn King, the governor of the Bank of England, said Britons’ spiralling levels of debt could create difficulties for the economy.

"The proportion of unsecured debtors reporting their debt as a serious problem has gone up, the number of calls to the National Debt Helpline has risen quite sharply, so I think the signs are that a potentially large social problem, with many households getting into difficulty with their debts, is materialising."

"The rise of the ‘credit junkie’ phenomenon and the ‘spend, spend, spend’ culture is a long term issue," she said. It needs addressing at grass roots level and that means via the educational system," she added.

Frances Walker, a spokeswoman for the Consumer Credit Counselling Service (CCCS), said it was a concern that so many people were considering bankruptcy.

"Sometimes bankruptcy is the best route to take but there are serious repercussions. We would recommend anyone with debt problems to take expert advice from a free debt service like us or Citizen’s Advice before they take such a serious step."

Ms Walker added that the average borrower calling the CCCS for help had debt of more than £30,000 to more than 11 creditors, a 5 per cent increase on the year before. "We live in a society where credit is here to stay so we have to teach people how to use it properly," she said.

Times Online
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