Insolvency: a current problem for generation X

15.06.2005 One of the government’s long term objectives is to reduce debt by encouraging people to save more of their money for retirement. In contrast, the number of bankruptcies in the UK jumped early this year to over 13,200 ; 28 per cent more than last year. These statistics are in line with the published number of increased mortgage repossessions. Economists have warned the government that the level of personal debt is reaching a peak where people are using up to 20 per cent of their disposable income to repay their loans.
 


There are several other reasons that justify the general increase in debt. Extremely optimistic advice about the state of the economy and personal career prospects have driven people to borrow more than what they can afford to pay. On the other hand, the rush to set foot in the growing property market has influenced many others to take enormous mortgages. Furthermore, with the increased competition among financing institutions, it has become easier to borrow money, even for people with bad credit records. The reason for the majority of bankruptcies is banks’ and building societies’ aggressive marketing of credit, which attracts mainly people under 30 and students who have just finished university and clearly cannot pay.