Bankruptcies in England and Wales are rising steeply. The most recent figures from the Insolvency Service show an increase in personal bankruptcies of more than 9% during the third quarter of 2008 over the same quarter in the previous year. When business failures are included the figures are worse, showing an increase of 26% from the same quarter in 2007.
This upward trend in business collapse and personal debt shows no sign of abating. As recently as September last year it was estimated that UK debt was growing at a rate of ?1 million every 7.3 minutes! That's an amazing ?200 million debt accrued in just one day - an unsustainable level by anyone's standards.
Perhaps if global banks had been a little more circumspect about the loans they made, particular within the sub-prime sector, and tighter regulation had been employed over how that debt was managed within the banking industry, the problems that we see today would have been alleviated. There has been criticism levelled at individual borrowers who knew they were taking on debt beyond their means but it is easy to be critical with 20-20 hindsight and to forget the role that banks and lenders played in encouraging us all to believe that high levels of debt were nothing other than 'normal'.
In the quarter ended September 2008 there were over 27,000 personal insolvencies, made up of bankruptcies and Individual Voluntary Arrangements or IVAs. Whilst IVAs are a popular option for people who can afford to pay back some of their debt, the banks appear less willing nowadays to come to agreements that allow this to happen, pushing more and more people towards the only option - bankruptcy.
The effects of personal bankruptcy should not be under-estimated. It is most certainly not a soft option that allows people to become debt free. Secured assets - including the home - will be sold and the individual's credit ratings will be severely affected for many years to come.
Being backed into a corner by rising debt is serious. For those who have equity in their homes, selling property to pay off the debt may be an option. This step should be considered alongside impartial advice from debt agencies, but for some people selling their only asset - i.e. their home - is the only alternative to declaring themselves bankrupt.
Selling property in a recession is difficult. Property Rescue guarantees to buy your home and will complete the transaction in a matter of days, which should be fast enough for even the most insistent lender. If your home is under threat of repossession or debt looks as if it will end in bankruptcy, study your options before you make any decisions. Contact Property Rescue for a free valuation of your home and information about their guaranteed sale service.