Recent figures have revealed that a massive 100,000 people a year are being declared bankrupt in the UK. That's 300 people every day.
With so many people in Britain struggling with money, we all need to be more careful about who we enter into financial relationships with.
We consider the causes of the UK bankruptcy epidemic, and what you or your business can do to screen potential customers.
What is bankruptcy?
Bankruptcy is a form of insolvency, which means that a person's unsecured debts are more than their assets (belongings). By UK law, someone who is insolvent can file for bankruptcy by paying the court £180 in fees and £525 to an Official Receiver.
If the court approves the bankruptcy, the debts are written off, and creditors aren’t allowed to contact the bankrupt person or take legal action to make them pay what they owe.
You can find out more about declaring bankruptcy in the UK from Direct Gov.
Image by: LendingMemo
What's causing the UK bankruptcy epidemic?
Statistics released in June showed that one person is made bankrupt in the UK every five minutes and twelve seconds. On top of this, 25,000 people will lose their homes through repossession over the next year. Despite the improving economy, at least 15 million people are still living on the edge of poverty, with 41% of people saying that they experience stress due to money issues.
So, what's causing the problem? Many cite the high reliance on credit and pay-day lenders as a key problem, as it causes people to lack resilience when it comes to financial shocks, such as losing their job, the end of a relationship or rising interest rates.
A large portion of the population is now trapped in a cycle of debt, borrowing money purely to keep up with their existing credit agreements. People trapped in such a spiral of debt are financially fragile, with an estimated 13 million people without enough savings to last a month if their income dropped by a quarter.
What does this mean for you?
With so many people in the UK struggling with money, it's essential that you or your business ensures that anyone entering into a financial agreement with you is financially stable.
Whilst many people who declare bankruptcy have simply fallen on hard times and will go on to have a clean financial slate, there are those who are unable to change their financial habits and will remains stuck in the cycle – those who file for numerous bankruptcies are known as serial filers.
Here at Peopletracer we offer you fast, accurate financial search services, to help you identify potential debtors. Our Bankruptcy Search allows you to search for bankruptcies against a person.