While the banks, that are too big to fail, continue to get taxpayers’ money to shore up their balance sheets and pay their obscene bonuses, the rest of are not so lucky it seems. Despite government urging lenders to be ‘understanding’, the number of insolvencies is rising and is set to top 130,000 by year’s end. This is a 28% increase since last year. Rising unemployment, the credit crunch and many taking wage cuts have all had a detrimental effect on the ordinary person in the street.

It has also seen a massive growth in companies promising to either eliminate the debtors problems altogether or reduce the debts by a considerable amount without going bankrupt. This is done usually by using a Debt Relief Order (DRO) for those that owe less than £15,000, or an IVA for those who owe more.

As debt problems increase these mechanisms may offer the individual an easier way out than bankruptcy or hanging on in desperation for years, maybe decades. Debt is also gradually losing its stigma to the extent where people may start openly boasting about how much they had written off.

But there is a major drawback of course. Try getting credit for the next 6 years. The Credit Referencing Agencies such as Experian and Equifax will release this data to any lender you approach for a mortgage, remortgage or credit card. This will almost certainly result in the rejection of your application, especially as lenders have tightened up their criteria. Credit information can be passed on by CRAs for 6 years for problems with unsecured loans and 12 years for mortgages.

Interestingly, whilst the number of personal insolvencies has risen, the number of businesses going under has declined slightly. But this may be down to the taxman being overly co-operative, but this will have to end sometime and we may end up with a surge of business bankruptcies as the HMRC ultimately wields its powers.

These are not pleasant times for many people and Christmas this year will be especially fraught.

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