Bankruptcies soar to record high

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Bankruptcies soar to record high

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tahir

Joined: 28 Oct 2004
Posts: 45420
Location: Essex

Posted: Fri Feb 04, 05 7:22 pm Post subject: Bankruptcies soar to record high

The number of people going bankrupt hit a record high in the last three months of 2004, figures from the Department of Trade and Industry have shown.

Individual bankruptcies were up 34.6% on the same period last year and 8% on the previous quarter, suggesting higher interest rates are beginning to bite.

On a seasonally adjusted basis, 13,013 individual insolvencies were recorded between October and December.

But company liquidations fell 0.9% to 2,2938, down 11.1% year-on-year.

The record high level of consumer debt suggests that a number of people have borrowed to their limits.
Howard Archer, Global Insight

Of those people in England and Wales unable to pay their debts in the last three months of 2004, 9,803 cases were bankruptcies and 3,120 Individual Voluntary Arrangements (IVAs) - which allow debtors to come to an agreement with their creditors.

Surging debt

"The fact that the number of individual insolvencies rose significantly through 2004 ... indicates that higher interest rates have increasingly pushed heavily indebted people over the edge," Global Insight economist Howard Archer said.

The Bank of England has raised rates five times since November 2003, from historic lows of 3.5% to the current 4.75%.

But as the Bank has increased rates in an effort to cool consumer spending, overall consumer debt has soared past the £1 trillion mark.

The latest figures from the Bank itself show consumer credit and mortgage borrowing growth accelerated in December.

Mr Archer warned that the Bank should carefully consider the risks to the economy before pushing rates any higher.

"The record high level of consumer debt suggests that a number of people have borrowed to their limits and are vulnerable to even a modest rise in interest rates," he added.
Story from BBC NEWS:
https://news.bbc.co.uk/go/pr/fr/-/1/hi/business/4236237.stm

Published: 2005/02/04 12:39:57 GMT

© BBC MMV

jema
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 28111
Location: escaped from Swindon

Posted: Fri Feb 04, 05 7:31 pm Post subject:
I can believe it. Time was when interest rates were 12% but all a 1% rise from there meant was finding less than 10% extra. If people borrow to the hilt at 4% and it raises 1%, that is a 25% rise! jema

sean
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 42207
Location: North Devon

Posted: Fri Feb 04, 05 7:37 pm Post subject:
I can believe it, but have very little sympathy for most of those involved. In historic terms interest rates are very low. Also (and I appreciate that this is not statistically significant) everyone I know who has gone bankrupt did so by borrowing money to throw at what was obviously a lost cause.

Bec

Joined: 28 Nov 2004
Posts: 71
Location: Newquay, Cornwall

Posted: Sun Feb 06, 05 2:33 pm Post subject:
That's a bit harsh Sean. I appreciate that there may be some people who have not kept their borrowing in check but that isn't the same for everyone. Circumstances change, things happen that are all beyond our control and sometimes you have to make a big decision to get out of your situation. Bec

tahir

Joined: 28 Oct 2004
Posts: 45420
Location: Essex

Posted: Sun Feb 06, 05 2:36 pm Post subject:
He did say "most", and i'd agree with him, most people are driven by greed and desire, believe me I've known many multi millionaires that have gone bust because they over-extended themselves due to greed.

jema
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 28111
Location: escaped from Swindon

Posted: Sun Feb 06, 05 2:53 pm Post subject:

tahir wrote:

He did say "most", and i'd agree with him, most people are driven by greed and desire, believe me I've known many multi millionaires that have gone bust because they over-extended themselves due to greed.

Remember Big Bob!

jema

tahir

Joined: 28 Oct 2004
Posts: 45420
Location: Essex

Posted: Sun Feb 06, 05 8:56 pm Post subject:
Exactly, he wasn't short of a bob or two

Richy Rich

Joined: 24 Mar 2005
Posts: 31
Location: Coventry - Warwickshire....

Posted: Mon Apr 18, 05 12:54 pm Post subject:

This is an interesting post for me because I have been on both sides of the fence...

i do live by the -:

"Speculate to accumulate"

phrase...

And so have borrowed a LOT of money in the hope of making a small lump sum. I have thought and thought and thought about any financial decision of great consequence and I am winning (even against the sordid tax man)...

BUT - enough trumpet blowing - I dont' consider myself clever or intelligent - I just thought about things VERY VERY hard. I have spoken to many many people...

What I HATE are people who are living it up for the now - and when asked how their "call centre" employment funds the champers/cocaine lifestyle - they pull out a flash credit card and wave it at you... yet when the credit has gone they come crying for comfort...

Well feck orrfff is what I say.... I have SUCH little sympathy because thats not living in reality thats living a hollow dream....

Ugh... feather ruffled he sits back down on the eggs to lower his blood pressure...

Rich

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