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uSwitch Survey Makes Grim Reading in Deed

Although Scotland has not officially issued the amount of personal bankruptcies, a survey has discovered that around a quarter of the people in Great Britain sense that they have poor credit and they are trying to clear debt, in spite of the recent drop in interest rates.

Accountancy company, PKF, have worked out that by the end of last year it had affected nearly 14,000 Scottish debtors, four times the number of people it affected 10 years ago.

Rather than letting debtors get to the point of no return where they are forced into bankruptcy, PKF are advising people to either consolidate their debts or take out a Protected Trust Deed (PTD), as a “soft” type of bankruptcy where borrowers can negotiate with creditors instead of being in a position where there is no flexibility.

Growing inflation and food and fuel prices, combined with increasing mortgage repayments and house prices seemingly stalling and falling, could mean that the credit crunch will take a mighty bite out of the pocket of the average Brit.

The Community Safety Minister of the Scottish Government, Fergus Ewing, has outlined a scheme for an inexpensive £100 bankruptcy for those with the least money so that they can avoid legal action against them. This will undoubtedly lead to more bankruptcies being declared in 2008.

Many people will declare bankruptcy or plump for an individual voluntary arrangement (IVA) within the first quarter of this year as overspending on credit over Christmas will push them beyond their financial limits.

uSwitch.com, a cost comparison site, has found that just fewer than 10 million people in Britain had exhausted a line of credit over the past half a year. Nearly 40 percent of wannabe borrowers have had an application for a credit card refused in that six-month period and one in five have had a request for loans rejected as the lending policies of banks have been tightened.

uSwitch.com discovered that both personal and household debts have reached epic proportions and many of those deep into the red have resorted to secured loans in order to consolidate their debts.

The personal finance expert at uSwitch.com, Mike Naylor, said, "Anyone with multiple debts and a poor credit history could be vulnerable to the impact of the credit crunch and should seriously consider consolidation while the option is still available."

Trust Deed News posted on 25 January 2008

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