The latest UK government figures reveal the number of people in England and Wales being swamped by debt has reached a record. Insolvencies in the second quarter of the year were 66% higher that the same period last year.
Insolvency expert Mark Allen said rising property prices had encouraged Britons to borrow against the value of their homes: “The worrying thing is that people are continuing to remortgage their homes. Now that’s fine when house prices are increasing, but when house prices stop, people can no longer remortgage their homes.”
Britain’s major banks have reported a surge in bad debt and this week’s surprise UK central bank interest rate rise means there will be higher payments on credit card debt and mortgages.
Francesca Hopwood-Road of the Citizen’s Advice Bureau – which helps people in financial difficulty -said some cannot even afford to go bankrupt: “It can cost upwards of 500 pounds (740 euros) to go bankrupt, and so for some people that’s simply just not an option, and obviously the repercussions of bankruptcy can be quite considerable; for example it may also affect your chances of opening a bank account in the future.”
And it is not just a British problem. The latest figures show that 8,000 Germans went bankrupt in May and June, that is a 54% increase on the same period last year.