Personal loans send Britons in debt spiral

Thu, 09 Jun 2005

Personal loans are a cause of a dramatic rise in bankruptcies that is being predicted for the UK this year.

According to the Consumer Credit Counselling Service (CCCS) high levels of personal debt is causing many Britons, particularly young adults, to file for bankruptcy.

The debt counselling charity reported that they received double the number of calls last month than in May last year. A quarter of callers said they were on the brink of being insolvent.

According to Frances Browning of the CCCS, they are now recommending taking bankruptcy to a higher proportion of callers than ever before.

She said that for many people there is simply no way of repaying their personal loans, and that it is impossible for them to deal with their level of debt.

Ms Browning said that they are seeing a great deal of young people without assets who have huge debt and that filing for bankruptcy is often "the only way out for them".

According to government figures, individual bankruptcies reported last month showed an increase of almost 25 per cent on the same month last year, with 10,091 cases.

Analysts have warned that if urgent action is not taken to relieve the situations, Britain could see the number of individual bankruptcies rise to over 60,000 a year by 2008.

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