Recent statistics released by the government showed the leading causes of bankruptcy in 2015 were living beyond means, relationships breakdowns and reduced levels of income. The data also highlighted differences in the reasons why men and women go bankrupt.
Gavin Bates, Insolvency Practitioner at PBC, said: “These figures are similar in some respects to the statistics we discussed in our blog last year, however, a particular point of interest is that ‘living beyond means’ is the most common reason why both men and women go bankrupt. This certainly correlates with our experience at PBC where we are seeing an increasing number of people who are in financial difficulty because they are spending more money than they can afford.”
The research also ties into the increases in household debt that have been making the headlines recently. Official figures from the Bank of England showed that personal debt, including credit cards, overdrafts and loans, has risen to its highest level since December 2008, leading debt charities to call for greater assistance for those that are struggling.
Gavin Bates continued: “People seeking credit may be doing so simply so they can afford essential items and cover day-to-day living costs, while others do so to ‘keep up with the Joneses.’ Taking on additional debt may be in some circumstances unavoidable, and works if you can manage to make the minimum payments. It would be better to review all your finances, reduce or cut outgoings and not borrow in the first place. All too often we see people who have suffered a reduction in, or loss of, income, or a period of ill health which make the position unmanageable very quickly.”
Individuals who find themselves with spiralling debts should seek advice as soon as possible so they can take action to get their finances back into shape.