Young adults resort to 'bankruptcy lite'
Posted in 'Dealing with Debt' by Barry Stamp
30 December 2011
More young adults are turning to bankruptcy, according to official sources. Since they were introduced in 2009, one in four people who have taken out Debt Relief Orders Service. DROs are commonly known as ‘bankruptcy lite’ and are a form of insolvency available only to those with few assets, low income and relatively low levels of (DROs) fall into the 25-34 age category according to the Insolvency debt.
In an attempt to address this growing problem, the Insolvency Service has launched a “Dealing With Your Debt” campaign which tries to encourage debt-stressed young adults to seek help at an early stage.
The campaign is supported by several free debt advice charities including the Citizens Advice Bureau, Money Advice Trust (MAT) and the Consumer Credit Counselling Service (CCCS).
Joanna Elson, CEO of Money Advice Trust commented: "Many struggling 25 to 34-year-olds might have expected to be further up the financial ladder by now. At the same age their parents would most likely have bought their first home, have a comfortable pension lined up, and be saving for the future. For today's 25 to 34-year-olds the picture is much bleaker. The good news is that help is available and free advice services can make a big difference."
"Traditionally when young people have borrowed money it has been with the expectation of a continual rise in earnings over coming years. Young people of today may have borrowed with the same expectations, but the difference is that those expectations have not been realised, leaving many struggling to meet agreed repayment plans.”
"At the same time it is getting more expensive to fill up the car, heat the home and put food on the table. The combined effect of all these pressures is that more young people are looking for a different solution to help them back on their feet, and for some the most suitable option is a debt relief order."
We reported on the rise and rise of DROs just six weeks ago, and how they have been displacing Individual Voluntary Arrangements (IVAs) as the ‘easier’ bankruptcy option.
But whatever form of bankruptcy is chosen, the upshot is the same. It will stay on your credit report for six years and on HM Land Registry records for twelve years. Bankrupts willl have trouble getting credit even after discharge, and even opening a bank account is difficult.
Some debts, such as student loans, remain totally unaffected by insolvency and remain due.
You can check your credit report for insolvencies by accessing our Multi Agency Credit Report - it’s free to trial for 30 days, then costs only £9.99 per month until you cancel, which you can do at any time. Our Multi Agency Credit Reports are the most comprehensive available in the UK – containing more than twice the information than any other credit report.
Barry is a Chartered Banker and a Fellow of the Institute of Credit Management. He has a degree in Statistics and Business Economics from the Open University. Barry writes mostly on news from the worlds of banking and mortgages.
Barry is Managing Director at checkmyfile.
If you get behind on your energy bills you may be forced into installing a prepayment meter, but this is often not affordable, according to Ofgem.
The energy regulator states that for customers who are already experiencing difficulty in making payments, the additional cost of up to £900 for installation of a meter is excessive.
Ofgem have proposed that the maximum fee for installation should be £100-£150, to help those who are already vulnerable to debt. With energy on this type of meter already some of the most experience available in what is traditionally a competitive market, many campaigners argue that putting people onto meters traps them in a cycle of debt that they find difficult to break.
"It's deeply unfair t .....
There are 1.6m households living in extreme debt in the UK, according to a report by the TUC. Their Britain in the Red report has found that there are more than 1m families on an income below £30,000 that are in ‘extreme debt’, which means that 40% or more of the household income goes on repayments excluding mortgages.
Unsecured debt, including car loans, credit cards and personal loans, has risen by £48bn between 2012 and 2015 to £353bn. Further to the number of households in extreme debt, a further 3.2m households are in ‘problem debt’, defined as using more than 25% of income on repayments.
The TUC general secretary, Frances O’Grady, says, “Families can’t continue relying on credit cards and loans to get by. But with the .....
Citizens Advice finds those suffering with poor mental health are more likely to struggle keeping up with bill payments
Page: 1 of 47