Ladies in the red – and in the pink

Big-spending celebrities such as Jordan with her £3.5 million pink holiday home in Cyprus have earned their cash and can afford to splash it out.
But for millions of us trying to maintain the lifestyle we want rather than the one we can afford is a major problem.

The UK’s debt binge has seen us run up more than £1.1 trillion in debt without including money spent on mortgages. And the strain is starting to tell after the Bank of England turned the screws with five interest rate rises in the past year. Increasingly it is women who are feeling the strain – nearly half of all people applying for bankruptcy are now women.

MoneyExpert.com explains how the going is getting tough…

Bankruptcy

The number of women applying for bankruptcy has risen dramatically in the past seven years. In 2000 just 32 per cent of women went bust – now it’s nearly 48 per cent and experts expect the total to keep climbing. By next year it’s likely more women than men will be declaring themselves bankrupt.

Debt problems

Analysts believe more women are racking up unmanageable debts as they now feel more under pressure to maintain lavish lifestyles. They want to spend it like the Beckhams but don’t have the income to sustain the debts they run up.

More women in work believe they have to compete with men but they struggle because they’re not paid as much. The gender pay gap is still massive with women earning less and that makes them more vulnerable to rising interest rates. Increasingly they have to borrow more to get on the property ladder – and if they live alone there’s no one else to share the burden.

When the going gets tough

Government statistics show more than 56,000 have declared themselves insolvent this year with the 2007 total likely to top 100,000. That will be another dismal record with more and more people succumbing to massive debts and the UK borrowing binge funded by credit cards and loans.

Get going on debt

Keeping your debt under control is vital – you should try and consolidate all your debts into one manageable payment if possible. If you are a homeowner you can use the equity in your house to take out a secured loan against the value of your property. Or for debts under £25,000 why not take out a personal loan?

But if debt is out of control…

If you are struggling with debts and cannot see a way out you can choose between bankruptcy or an Individual Voluntary Arrangement.

With bankruptcy there are serious implications – you may struggle to borrow money in the future and have to have your spending monitored.

An IVA is a legally binding process allowing a person with serious financial problems to re-pay their debts to their creditors over a five-year period. This can reduce your unsecured debt by up to 75% and also ensure that all interest is frozen and charges stopped. Once it is concluded you will be considered debt free even though you may not have actually paid off all of their debts in full.

What now?

Try MoneyExpert’s consolidation calculator and see if a consolidation loan could be your answer.

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