Rise in young bankrupts

Rise in young bankrupts

The figures, provided by the Insolvency Service, showed that almost 15% of all those declared bankrupt in the 2003/4 tax year were aged 30 or younger. This was nearly twice as many people as in 2001/02.

And although a higher proportion of bankrupts were men, representing 63% of cases, the gender gap is closing. In the 2003/04 tax year, 45% more women were declared bankrupt than in 2001/2.

Around the country, the south-west had the most female bankrupts, at 39.6% of the total, while in the north-west, 34.5% of bankrupts were women.

The north-west and the south-east had a greater proportion of young people declared bankrupt than ever before, recording increases of 108.42% and 117.69% respectively. But the south-west had the largest proportion of under-30s declared bankrupt, at 17.61%.

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PricewaterhouseCoopers, which analysed the figures, said consumer debt problems among women and young people were contributing to the record numbers of bankruptcies in England and Wales.

It said bankrupts are now far less likely to have been in business - the proportion who were self-employed dropped from 58% in 1996 to below 27% in 2004.

"A 'new bankrupt' is emerging who is more likely to female, under 30 and has not been in business before," said Patrick Boyden, a partner at PricewaterhouseCoopers.

"Consumer debt levels among young people and women appear to have contributed to the explosion of bankruptcies last year and many individuals mistakenly believe bankruptcy is now a softer option."

Bankruptcy has been steadily increasing over the last few years.

In February, the Department for Trade and Industry (DTI) said 46,651 people in England and Wales became bankrupt or entered an individual voluntary arrangement (IVA) with creditors during 2004.

Last month, it revealed that the first quarter of 2005 had seen a rise of 27.9% in insolvencies, the majority as a result of bankruptcy orders.

A report published in February showed that nearly two-thirds of bankruptcy cases in Scotland involved people under 30 years of age, and the most common reason given by young people for their debts was credit card abuse.

There are several contributory factors to the increase. British consumers broke the £1,000,000,000,000 (£1trillion) debt barrier in 2004, leaving many people sensitive to last year's interest rates rises.

A change in bankruptcy law in April 2004 meant that many bankrupts are now discharged within a year, rather than the two or three years it took previously. This change removes some of the stigma associated with bankruptcy, and is thought to have made it a more attractive option for people unable to deal with spiralling debt.

When opting for bankruptcy, many people are still unaware that they will encounter problems getting credit for up to six years after declaring themselves bankrupt.