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UK bankruptcy at record levels: our thoughts

Representative Example

Total amount of credit £80, duration of the agreement 29 days, rate of interest 292% per annum (fixed), total amount payable (in one repayment) £98.56. Representative 1281.8% APR.

Online loan provider 247Moneybox.com has taken the opportunity to review and comment on the latest official figures indicating that the number of people going bankrupt across England and Wales exceeded levels over the previous four years in 2019. Between April and June, 4,228 bankruptcies were recorded. This represents the highest number for any quarter since the last three months of 2014. This translates to 1 in 382 adults in the UK as being recorded as bankrupt. Women and those that live in coastal towns have also been classified as most likely to go insolvent. Below the lender gives their thoughts on this quite worrying statistic.

Tiles spelling bankrupt

Our thoughts

The increasing inability to repay debt comes hand in hand with the thought of the possibility of bankruptcy. As we all know a lack of control over debt can lead to bankruptcy, but how many of us in the UK actually suffer this financial consequence? With the current bankruptcy statistics reaching their highest over the last four years the answer to this question clearly seems to be a lot of us.

Automatically we are drawn to ask who actually is more at risk of suffering from insolvency? It is easily acceptable to think that those who have a steady income are less prone to entering an insolvency procedure as they have the cash flow to allow them to keep on top of such debt issues. However, this is not necessarily the case as 40% of adults across Britain consider themselves to be fairly worried about their levels or debt and that they struggle to make their wages last until their next payday. The latest findings illustrate that although adults are receiving an income into their households, it is the debts that they incur which foreshadows the dread of falling into a situation where bankruptcy is their only option.

A shocking area of the statistics highlighted that young people are also seen as a growing concern in terms of bankruptcy. The number of 18 to 25 year olds falling into bankruptcy has increased from just 208 insolvencies in 2016 to almost 2,000 this year, a 10-fold increase in the space of only 3 years. In 2016 only 1% of under-25s made up all personal insolvencies and in just 3 years this figure has risen to 6.5%. This growing area of concern is said to be fuelled by self-employment and also the ease of obtaining credit cards, which is a typical temptation for many.

Sub-prime credit cards are viewed as a culprit for such rise in bankruptcies. The credit cards have high annual percentage rates of interest (APR’s) ranging from 30%-70% compared to other credit card alternatives. Such credit cards with their high APR’s target people with low credit scores, therefore not aiding in their situation to prevent bankruptcy in the slightest, more so encouraging such an outcome. What is worrying about these credit cards is that around 4 million people have such a card today.

It is completely understandable that life can be unpredictable, and so for some bankruptcy is truly the only option. Contrastingly the question on everyone’s mind is whether these statistics will continue to rise or not. With dealings such as Brexit edging closer, the pound’s value depleting on a daily basis and a possible recession looming, will bankruptcy statistics also look to weaken Britain’s situation? With such a possibly dreaded situation advancing it is only advisable that caution is taken, specifically when making large purchases. Insolvency practices are not something to be taken lightly as they are very hard to come back from.

Consequently, with bankruptcy depicting such a growing concern in today’s society, it is a question of what needs to be done in order to conquer the rise and what preventative measures need to be put in place to avoid such a situation again.