Britons in their 20s in more debt
Tuesday, 26 September 2006 12:00
Debt problems among Britons aged 20 to 30 have significantly risen, the latest In-Debt Index shows.
The figures, compiled by insolvency specialists W3 Debt Solutions, show the number of people in their 20s making an individual voluntary arrangement (IVA) has soared 90 per cent in half a year.
Currently, Britons in their 20s make up a massive 28 per cent of all those taking out IVAs.
"I am very concerned about the sharp rise in IVAs among 20 to 30-year-olds," said Greg Mullarkey, chief executive of W3 Debt Solutions.
"Living with large debts blights lives and it is sad that so many young people are forming poor budgeting habits at such an early stage in life."
IVAs are legally binding contracts between a borrower and all of their creditors to repay only what they can realistically afford with the balance of the debt being written off.
However, while seen as a 'softer alternative' to bankruptcy, IVAs have serious implications for people getting credit in the future and do not always safeguard people's homes and other assets.
IVAs have boomed in popularity among those in serious debt, with figures from the Department of Trade and Industry showing a 153 per cent rise in the number of IVAs since August 2005.
And while Britons in their 20s saw the largest rise in numbers, those in their 30s still make up the largest proportion of IVAs (33 per cent).
Additionally, there was a 14 per cent increase in the number of over-50s taking out IVAs compared with the previous six months.
"My biggest concern is the people in the over 50 age bracket who tend to have much larger debts averaging around £40,000 each," Mr Mullarkey said.
"When they would rather be saving for retirement the prospect of having a large debt over their heads must be daunting.
"Our advice to young and old, without sounding too trite, is to live within your means and resist cheap credit, despite its obvious temptations.
"And if you have got into debt, don't ignore your situation and seek advice straight away."
Comments
Newsletter sign up