Paddling into deeper waters

Paddling into deeper waters

The shocking lengths people will go to avoid the stigma of bankruptcy was laid out in a story spread over dozens of pages in every newspaper last week. The bizarre saga of 'canoe couple' John and Anne Darwin was revealed in full, including details of the pair's financial mess that led to the whole sorry tale in the first place. The couple earned a combined wage of around £2,000 a month but were struggling with repayments of more than £6,000 on the mortgages for 12 rental properties as well as their own home.

They, like thousands of other people around the country, had stretched themselves to the extreme, but why go to such lengths to rid themselves of the problem? The answer, according to one police source, was that the couple feared the 'loss of face' that either a bankruptcy or sale of their assets would entail.

The Darwins may have taken exceptional measures to tackle their debt, but this shame associated with bankruptcy drives plenty of people every year to lesser lengths to avoid it. Sadly, many of these people finish up in expensive debt management plans or individual voluntary arrangements - both alternatives to bankruptcy - that are not always suitable for them. They then end up in a worse scenario, with bigger debts and worries than they started with.

Independent debt advice organisation the Bankruptcy Advisory Service - which does not simply advocate bankruptcy as a solution - says one of its major gripes is the lack of advice.....continued below

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about the options available to people in debt. Unclear about what they should do, people either bury their head in the sand or turn to companies that sell debt solutions for help. Unfortunately, these companies are often all too keen to push debtors in the direction most lucrative to them, often to the detriment of the debtor.

If you cannot make your debt repayments but have little in the way of assets, bankruptcy might be the best option, but talk to Citizens Advice, the National Debtline or the Bankruptcy Advisory Service first and find out the facts. They are all on standby for a barrage of calls this year.

Last week I wrote a story about how charities are being affected by the credit crunch. Among those I spoke to was George Rockingham, who runs Norfolk's biggest animal rescue centre, Pact. Donations from its regular benefactors have fallen 25 per cent since the beginning of the year, while at the same time people have been putting less into its collection boxes. Further evidence of a slowdown in charitable giving emerged last week in a report by the Cass Business School, which showed that charities' fund-raised income has fallen to an all-time low.

Part of this is due to a drop-off in sales at charity shops, which fell by 9 per cent last year as a result of competition from services such as eBay. However, Pact says it is opening a new store because it believes more people will spend money there during a recession. This is a theory backed by the Cass report, whose authors felt that charity-shop income could pick up as people feel the squeeze on their wallets.

If money is tight and you are planning on stopping donations that come out of your salary, why not visit a charity shop instead? You could save money and still be giving to a good cause.

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