Bankruptcies On The Increase

The number of Britons declaring themselves bankrupt or seeking voluntary arrangements will continue to rise in 2006, debt advisers said on Friday, as the volume of people seeking debt advice shows no sign of abating.

But signs that consumers are starting to turn away from borrowing on expensive credit cards could see personal debt levels falling in 2007.

The National Debtline charity said that so far in January it had received 19,500 calls -- 1,000 a day -- from people in financial difficulty, 30 percent more than last January.

Citizens Advice Bureaux (CAB) Debt Policy Adviser Peter Sutton said there were worrying macroeconomic trends that suggested worse was to come.

"We have seen huge numbers of people seeking help for their debt problems in a decade when we've had some of the most benign economic conditions," he told Reuters.

"What's going to happen if that turns? There could be a huge wave in debt problems. This week we've already seen a rise in unemployment levels.

"If there is a bit of an economic downturn we need the credit industry to hold its nerve and not be too hasty with enforcement."

Sutton said a fifth of the five million enquiries received by CABs each year were about debt, and consumer credit was the biggest single issue they dealt with.

The National Debt Helpline said almost two-thirds of the callers had concerns about credit card debts.

The most recent insolvency figures from the Department of Trade and Industry showed the number of bankruptcies and individual voluntary arrangements (IVAs) had increased sharply throughout 2005.

In the third quarter, there were 5,519 IVAs, 95 percent more than in the same quarter the previous year. Bankruptcies stood at 12,043 for the quarter, up 31 percent.

Reuters, January 21st