Bankruptcy on the rise as Britain’s consumer debt tops £1.3 trillion

03 August 2007
Bankruptcy is still on the rise, according to figures released today by the government, with 26,956 individuals becoming insolvent in the second quarter of 2007 – a 8.1% drop from the previous quarter, but a 4.2% increase on the same quarter last year.

Figures released by The Insolvency Service state that there were 16,258 bankruptcies, a decrease of 2.9% on the previous quarter and an increase of 7.7% on the corresponding quarter of the previous year, and 10,698 Individual Voluntary Arrangements (IVAs), a decrease of 15.1% on the previous quarter and a decrease of 0.7% on the corresponding quarter last year.

To help combat this problem, personal finance education should be on a par with history, geography, and other subjects available in schools to ensure that future generations have sufficient money management skills to avoid getting into debt, says financial education charity, the ifs School of Finance.

Rod McKee, Head of Financial Capability at the ifs School of Finance said: “The insolvency figures released today again highlight the need to ensure people have sufficient financial skills to make informed financial decisions. Equipped with such skills the number of people who find themselves facing unmanageable debt problems will reduce considerably.

“As the 200+ schools already offering a GCSE equivalent in Personal Finance have shown, students who take a standalone course in Personal Finance make positive changes to their financial behaviour and are able to manage their own finances effectively. We’d like to see every school offering their students the opportunity to gain these skills but achieving this requires Government action.”

Online price comparison site uSwitch.com reveals that individual insolvencies could reach an all time high of 112,588 by the end of the year. Mike Naylor, personal finance expert at uSwitch, says: “It is worrying that so many people are resorting to individual insolvencies, be it an IVA or bankruptcy, to resolve their personal debt problems.

“Consumers have a high propensity to borrow these days and there is a real risk that we will see many more people in serious financial difficulty if there are further increases to the base rate before end of the year or if we experience a sudden change to our existing economic climate.”

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