UK CONSUMERS THINK BANKRUPTCY LAWS TOO EASY
Latest Equifax survey reveals that good payers think they are subsidising those who choose to go bankrupt
London, 8th January 2007 –- A survey of customers of the Equifax consumer credit information service reveals that there is a general concern that bankruptcy laws have made it too easy for people to get out of their debts. This follows reports at the beginning of the year suggesting that almost 30,000 personal insolvencies are expected in the first three months of 2007, of which 10,000 will be as a result of excessive Christmas spending.
56% of respondents to the Equifax survey think that it is not fair that people who declare themselves bankrupt will be discharged in just one year with 65% suggesting that the Bankruptcy Law should be changed to make it more difficult for a person to take this option.
"It's an interesting response", confirmed Neil Munroe, External Affairs Director, Equifax Ltd. "I think that most people have sympathy with those who have got themselves into very serious debt and for which bankruptcy really does seem to be the only option. However, it seems that the reduction in the law, enabling bankrupts to be discharged in a year, seems to have hit a sore point with those who keep on top of their debts. 70% of our respondents felt that people who pay their debts on time are subsidising those who choose to go bankrupt. And 90% of respondents said they feel that bankruptcy simply doesn't have the social stigma it did 10+ years ago."
Last year saw a record numbers of personal insolvencies, exceeding 100,000 for the first time ever. But Munroe warns that even though going bankrupt is easier, the implications still need to be recognised. Whilst a bankruptcy could be discharged after a year, many people do not realise that it will remain on their credit file for six years. In addition to that, lenders use this information to assess an individual's credit application and bankruptcy will result in them either being declined or paying a premium. It could also affect their future employment opportunities.
"Consumers need to gain a clear understanding of credit and how to manage their debts and they need to realise bankruptcy may not be the best option."
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A survey was conducted with over 1,000 Equifax customers on 4th January 2007
