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Last Updated: Friday, 10 June 2005, 12:02 GMT 13:02 UK
Bankruptcies 'soar' among young
Unpaid bills
New laws have reduced the stigma of bankruptcy, experts say
The number of young people going bankrupt has risen sharply in the past two years, according to new figures, as personal debt levels have mounted.

PricewaterhouseCoopers said personal bankruptcies among the under-30s accounted for 15% of all failures in 2003-4.

That figure was almost double that of 2001-2 as more people chose bankruptcy as a way of eliminating their debts.

Young women are also more likely to declare themselves bankrupt.

Female rise

Men still account for almost two in three personal bankruptcies but cases among women are becoming more common, according to PwC, which analysed figures produced by the Insolvency Service.

The number of women finding themselves in irreversible financial difficulty rose 45% between 2001-2 and 2003-4.

I don't know how much people have thought about the repercussions
Pat Boyden, PricewaterhouseCoopers

More than 10,000 people went bankrupt in the first three months of 2005, the highest figure in more than forty years.

Critics believe this is a result of a cultural shift in society towards greater tolerance of debt.

Pain relief?

A series of interest rate rises over the past year have also put additional strain on many people's already-stretched finances.

PwC said the evidence pointed to a new class of bankrupt who was under 30 and has not been in business before.

Concern has grown over the amount of credit card debt incurred by young people, many of whom are attracted by interest-free introductory offers on cards.

Many twentysomethings are also amassing huge debts in order to pay for university study.

Changes to the law enacted last year have lessened the stigma attached to bankruptcy.

Most people can now be discharged from the constraints of bankruptcy - including the use of any earnings to repay debts and a bar on holding public office - within a year as opposed to the previous three.

Pat Boyden, a specialist partner in PwC's business recovery division, said bankruptcy seemed an attractive option to many young people to ease the "immediate pain" of huge debts.

Pain remains

However, he warned that bankruptcy was not a pain-free option.

It could affect someone's credit rating for up to six years, making it much harder for them to get a mortgage or any form of credit.

"I don't know how much people have thought about the repercussions, the main one being that their credit rating is nil for six years," he told the BBC.

"There will be a six-year period when they might be in a sort of credit purdah.

"If that is between the age of 24 and 30, that is a important time in someone's life when they may struggle to get hold of any plastic."

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