Poor Debt Management to Blame For Insolvencies

Poor Debt Management to Blame For Insolvencies

2009 witnessed record breaking personal insolvency statistics in the UK, with in excess of 134,000 people going bankrupt or entering into an IVA or Debt Relief Order.

APACS statistics found in 2008 that Britain has more credit cards than people and in 2009 the average credit limit on plastic was over £5000 per person! Our consumer pushed society has been, for quite some time, a little too use happy. We buy things without already having the money. We see. We want. We put on plastic. The recent recession that strangled the country for 18 months meant that credit was no longer as easy to get keep up of. So those who live on credit, paying off existing debts by taking on more, found themselves suddenly unable to make repayments. Contrary to the shared misconception that debts affect the lower income families the most, it was the numbers of middle class professionals demographic that saw the fastest growth where personal insolvencies were concerned. This is largely credited to their higher credit limits and a general inclination to spent a little more indulgently. The credit crisis meant these people found themselves unable to borrow more money and, despite being a group that we would typically consider perfectly capable of paying back debts, could not make repayments in a number of situations. This, in turn, led to thousands seeking formal debt restructuring.

So just how do we solve our poor money management problems? Well the British Government thinks it has the answer. It recently announced that children from as young as five will be given money management lessons in schools as part of the compulsory National Curriculum. Will this solve our problem? Well it certainly can’t do any harm, can it? before, 16 – 18 years olds have been able to simply leave school without having had a single money management lesson and are sent out into a world where credit is all too easy to reach. How can these people be expected to manage their money when they have never had to learn about it before? Perhaps the new Government motive will rule to a far more finance savvy generation in the coming years.

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