Are your finances on the brink?
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More than 30,000 people were declared bankrupt or insolvent in the first three months this year – a record high. And with the experts predicting a further interest rate hike this week, thousands more of us could face serious money worries. Here’s how to make sure you’re not one of them
If you made a human chain of all the people likely to become insolvent this year – all 130,000 of them – it would stretch through the Channel Tunnel and back again, according to accountancy firm KPMG.
That’s a frightening thought, but there is clear evidence that tens of thousands of us are losing the fight to keep our heads above water financially. The latest Insolvency Service statistics show 16,842 people were declared bankrupt between January and March this year.
Another 13,233 people entered into Individual Voluntary Arrangements (IVAs). IVAs are contracts between the individual and lenders, where some of the debt is written off in return for making regular payments.
dealing with debt
Stretched tight
With many of us carrying around heavy personal debts and with another rise in the cost of borrowing expected this week, even more people may start to find their finances stretched to breaking point. Figures from the Woolwich show we now spend around 19.9% of our take-home pay on our mortgage, compared to 15.9% in January 2002.
“With the two recent increases in interest rates and a further rise on the cards, the pressure on the over-indebted is only likely to increase,” says KPMG head of personal insolvency Steve Treharne.
Last year saw a boom in the number of people deciding to go for broke but the growth rate of people taking out IVAs has started to slow more recently. “Creditors are taking a harder line in deciding which IVAs to accept and debt solution companies are wary of putting forward IVAs which may not meet the approval of creditors,” says Treharne.
If you’re worried that your finances may be on the edge then you need to take action. We show you how.
