The UK’s largest credit reference agency is warning consumers that choosing sequestration as a way of dealing with debt could have serious consequences and should not be entered into lightly.
The warning from Experian comes as figures from the Institute of Chartered Accountants of Scotland (ICAS) last week showed that nearly three times as many Scots are going bankrupt now as in 1990.
The figures, compiled from government statistics, show that the number of “protected trust deeds”, agreements to pay back a portion of debt to creditors, and “sequestrations”, the legal Scots term for bankruptcy, trebled to 12,809 in 2005.
ICAS insolvency director Anne Bryce says the availability of easy credit has created a generation of “credit junkies”. She says: “People are spending what they don’t have and can’t pay back.”
In England and Wales, figures from the Insolvency Service, a government body, reveal there were 15,389 bankruptcies in the first quarter of 2006, a rise of 12.9% on the previous quarter and 73.4% on the same period a year ago.
Jill Stevens, director of consumer affairs at Experian, says: “Bankruptcy is not an easy way out of debt. It will probably mean you have to give up any valuable possessions you own. Even after your bankruptcy has been discharged, organisations may refuse you credit or other financial services simply because you have been bankrupt in the past.
“If you do manage to find someone who will lend to you, they are likely to charge you a higher interest rate as you will be considered a high-risk customer. Going bankrupt can also affect your chances of renting a home.”
- Sunday Herald
