This morning’s statistics show that the number of individual insolvencies has fallen again and this is fantastic news as we continue to battle the debt bulge. But it is important not to forget that insolvencies are still at a record high and have been for the last 10 years.
There are two main drivers for people to deal with debt themselves instead of seeking a formal solution such as bankruptcy. These are, firstly, complacency: for many their debt ‘pile’ has been around for a while now, and their fears of falling off the edge of the financial cliff are probably receding. Secondly, there is an increased awareness of the options available – there has been much publicity recently about the informal debt solutions that are now available which can help them negotiate getting interest and charges frozen and manage their debts informally.
Unfortunately there are still many people that will resort to desperate measures when dealing with debt. In fact, the Vincent Bond & Co Quarterly Debt Outlook for Q1 2012 has shown that (28%) 1 in 3 with unsecured debt are being seduced by payday loans. Payday loans in the UK are rapidly increasing with four times as many people using these loans in 2009 compared to 2006. In 2009 1.2 million people took out loans with total lending amounting to £1.2 billion. Fast track to 2012 and it is expected that 3.5 million people will take out a payday loan in the next six months.
Since the start of the 2009 recession payday loan companies have managed to pop up overnight. For some debtors, the only answer they can think of is resorting to a payday loan or loan sharks, but these are fraught with problems. Let’s face it, the name of the latter alone should put you off in the first place, because if you use one and fail to pay back what you have borrowed, the shark’s teeth will bite down hard and for some time, which could leave a nasty scar on more than your credit rating. Do not even think about using a payday loan as a long term method of borrowing money, you will make your situation a whole lot worse.
Tags: debt, debt advice, debt help, financial education, Financial Planning, financial solutions, individual insolvency, insolvencies, insolvency, payday loan, payday loans, personla debt, recession, unsecured borrowing, unsecured debt
