June 10, 2005

Young people more likely to declare bankruptcy

by brian_turner

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According to PricewaterhouseCoopers (PwC), which analysed data from the Insolvency service, the number of young people going bankrupt has increased significantly in the past two years.

PwC said more people were choosing bankruptcy as a way of eliminating debt. Personal bankruptcies among the under-30s accounted for 15% of all failures in 2003-4 - almost double the figure for 2001-2.

Although men account for approximately 66% of personal bankruptcies, the number of women facing bankruptcy increased 45% between 2001-2 and 2003-4.

Over 10,000 people went bankrupt in the first three months of 2005, the highest figure in over forty years. Critics believe that is due to society becoming more tolerant to debt and also because a number of interest rate rises over the past year have placed more of a strain on many peopleâ€™s finances.

According to PwC, there is a new class of bankrupt who is under 30 and has not been in business before. Many young people are attracted to interest-free introductory offers on cards and university students amass large debts to pay for their studies.

Changes to the law in 2004 have reduced the stigma attached to bankruptcy. Most people can now be discharged from the requirement to use any earnings to repay debts and a ban on holding public office, within a year, compared with three years previously.

Pat Boyden of PwC warned that bankruptcy could affect someone’s credit rating for up to six years, making it much harder for them to get a mortgage or any form of credit.

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