This Isn’t Rocket Science – It is Cause and Effect

News out lately about growing insolvency and/or bankruptcy rate in the UK. Nobody should be surprised that the number of people in financial trouble will continue to increase as more and more people carry greater balances on all sorts of debt instruments like loans, credit cards, etc.

Insolvency is the by-product of debt but while figures will surely continue to rise, it will not become a major problem for creditors unless the percentage of people going bankrupt becomes a significant figure. The reality is that if you look at any creditors overall extended credit, those that file for bankruptcy protection are a very small percentage of that portfolio

The number of bankrupts will always sound like a big number because it is higher than before. But you have to ask yourself, the number is big but compared to what? It is like saying that the number 4 is alarming compared to 2 but not compared to 1,000,000.

For example, in the US the number of people that file bankruptcy is huge and always proclaimed as the highest number ever but when you look at the number of bankruptcy filers compared to the adult population that number is only about 6/10 of one per cent of eligible citizens that file for bankruptcy.

No doubt about it, bankruptcy is a bad thing to live though and on an individual level each person in that type of financial distress needs care, love, understanding and compassion. In that context, every person that files out of financial trauma is one to many.

For recent articles on the subject visit:

IC Wales

Times

Insolvency Statistics