Over-45's Have Highest Personal Bankruptcy Rate

Rising Unemployment and Falling House Prices Cause Debt Crisis

Jun 12, 2009

The global recession has seriously affected over-45's. Rising unemployment, personal debt and falling house prices have caused personal bankruptcy rates to soar.

Personal bankruptcy rates are officially higher for over-45's than any other age group. Personal debts have sky-rocketed following rising unemployment and falling house prices. Borrowing money against rising property prices during the boom years appear to be largely behind these worrying statistics. Over-45's have been left with unsustainable personal debts and negative equity.

Personal Bankruptcy Rates Highest for Over-45's

As a direct result of rising unemployment and falling house prices, insolvency rates have soared for over-45's. Wilkins Kennedy, an accountancy and business advisory group, produced research indicating that 38% of those declaring personal bankruptcy were aged over-45. It also showed that bankruptcy rates had increased from 10,594 in 2004 to 23,767 in 2008- an increase of in excess of 124%.

Global Economic Downturn Causes Rising Unemployment

The rising unemployment trend has continued; the number of people seeking work increasing to 7.1%. This is 0.8% higher than in the last quarter and 1.8% higher than just 12 months earlier. John Philpott, Chief Economist at the CIPD stated that: "A rise in unemployment of almost a quarter of a million in a single quarter is truly appalling." A sudden fall in income means that personal debt becomes unmanageable for over-45's and has had a dramatic effect on personal bankruptcy rates.

Negative Equity and Falling House Prices

According to the Nationwide House Price Index (May 2009), the median property price currently stands at £154,016 compared to £186,044 in October 2007 - a fall of 17.22%. Over-45's have taken on too much secured debt and falling house prices mean that homeowners are struggling with negative equity.

Falling House Prices Cause Personal Bankruptcy Rates to Soar

Anthony Cork, the director of Wilkins Kennedy, stated that: “During the property boom, people were borrowing against their houses to cash in on rising values. With the crash in prices, many people have no longer got the equity in their homes to rely on if they are made redundant or if their income falls.”

Escalating personal debt, rising unemployment and falling house prices have made life very difficult for over-45's. This age group has been affected more than any other so it is hardly surprising to discover the personal bankruptcy rates are growing so quickly.

Charles, James. (June 8, 2009). "Recession hits older borrowers hardest." The Times.

Disclaimer: This article in no way attempts to give legal or tax advice. One should consult a licensed attorney, tax advisor, or other qualified professional.

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