The number of people filing for personal insolvency in the UK has skyrocketed, government figures have revealed.
There were 12,043 bankruptcies in the third quarter of 2005, an increase of 30 per cent on the same period of 2004, and 5,519 individual voluntary agreements, up 95 per cent.
The rises are so dramatic that one of the UK’s leading experts in insolvency says that dangerous and irresponsible lending practices must take a share of the blame.
Finance providers have come under sustained criticism of their lending practices, with MPs, consumers and consumer groups all condemning the marketing of homeowner loans and unsecured credit.
Half of the bankruptcy cases profiled in a new report by John Tribe of the Centre for Unemployment Law said that credit use was the main reason for their bankruptcy.
This was three times higher than the numbers blaming business failure for their position.
“A credit agreement is a two-sided contract and therefore you could argue both the debtor and the bank are equally culpable,” Mr Tribe told Reuters.
The British Bankers Association (BBA) disputed Mr Tribe’s position, saying that the number of bankruptcies was consistent with the rising levels of take up over the period.
“If you look at the macro picture, what you see is that we’re a nation of responsible lenders as we are responsible borrowers,” said the BBA’s director for retail credit Eric Lenders.
“Yes, bank staff are incentivised on loans but they are also incentivised to minimise bad debts.”
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