In just one day, 362 people in the UK will be declared insolvent or bankrupt. KPMG estimate this will increase to 411 people a day throughout 2009 or 1 person becoming bankrupt or entering into an Individual Voluntary Arrangement (IVA) every 3.5 minutes and many others seeking help from debt management services.
Frightening statistics. And if you don’t believe the recession is as bad as the headlines have been making out, consider that if the number does increase to 411 per day declaring insolvency or bankrupt, that will mean an incredible 150,000 people could be declared bankrupt by the end of the year. That’s the size of a medium sized town. Bankruptcy seems to be presented as an easy option to take if you get into difficulty financially. The attraction of not having to pay creditors and effectively write off debt may be tempting many to sign on the dotted line and bankruptcy doesn’t seem to have the social stigma that it once attracted.
But there are significant drawbacks of declaring yourself bankrupt. Your credit rating will be seriously damaged. Of course, if your financial circumstances are severe enough, you may not really care that much about your credit rating and simply need immediate help managing debt, but it can have lasting consequences even years afterwards. Your financial history may also impact your chances of applying for certain jobs, particularly in the banking and finance sector. Let’s be honest – would you take financial advice from someone who’s been declared bankrupt?
Finally, it can seriously damage the finances of those you owe money to. So not only is your financial situation affecting you – like ripples on a pond it spreads out into the wider community. Obviously, the best option is not to get into such a financial pickle that you have to consider bankruptcy in the first place. But if you are in trouble, and before you reach for the insolvency paperwork, talk to a professional debt advisor who may be able to show you an alternative that keeps you in business, trading and financially viable.
Tags: Bankruptcy, Debt advice, debt help, iva
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