Record numbers declaring bankrupt

More people are choosing to declare themselves bankrupt

Record numbers of people in Northern Ireland are declaring themselves bankrupt as credit card spending continues to spiral.

More people are entering individual voluntary arrangements (IVAs) to escape some of the effects of crippling debt.

IVAs are an alternative to bankruptcy that allows debtors to come to an agreement with their creditors.

Almost 900 NI people went bankrupt in 2005-2006 - a rise of 30%, Citizens' Advice Bureau told BBC News Online.

The number of IVAs entered into was 668 - an increase of almost 40%.

Bankruptcy orders have been served on almost 100 people in NI in the past month alone, according to the Belfast-based Irish News.

Bankruptcy is a legal procedure that could lead to an individual losing their home Scott Kennerley Citizens' Advice Bureau

The latest list of bankruptcy orders includes civil servants, farmers, taxi drivers, engineers, road hauliers and retailers.

Scott Kennerley, money advice development officer with Citizens' Advice (CAB), said there were several possible reasons why IVAs had had "increased dramatically".

"Firstly, there has been increased media coverage of bankruptcy as a possible solution to a person's debt problem, so more and more people are looking into it.

"Years ago bankruptcy carried a stigma which in today's society has diminished somewhat."

"Also, there is improved access to quality more advice from the advice sector. Citizens Advice has recently been awarded a contract from the DETI which will see the provision of 12 full time money advisers across Northern Ireland."

'Change in the law'

CAB warned bankruptcy was not something to be entered into lightly and people must seek advice.

"It is a legal procedure that could lead to an individual losing their home," said Mr Kennerley.

Bankruptcies rose from 280 in 2002, 350 in 2003, 582 in 2004 and 685 from 2004-2005 - an increase of 18%, said the Insolvency Service.

The practice of fining people for late payments and exceeding credit limits is out of control with evidence of constraint Eugene McMenamin SDLP

However, the number of court orders for the winding up of companies in Northern Ireland in 2004-2005 was 72 - a decrease of 14% from the previous year.

Some debt experts have suggested that going bankrupt is an easier option because of a change in the law in 2004.

Under the Enterprise Act, bankrupts can now find themselves discharged after just one year, down from three.

Experts have blamed greater personal debt for the rise in insolvencies.

SDLP assembly member Eugene McMenamin accused the government of "standing idly by and allowing credit card companies to bleed ordinary working class families dry".

"Recent increases in 'penalties' show clearly that there is no skin left on their faces and the practice of fining people for late payments and exceeding credit limits is out of control with evidence of constraint," he said.

Joe McDonald of the Ulster Farmers' Union said while it had not seen specific figures for bankruptcy within the industry, the level of debt in agriculture in Northern Ireland had reached £650m.

"The industry is carrying a very heavy burden - farmers are making capital investment in their farms, with new sheds, buildings and machinery," he said.

"It is a significant and worrying level of debt in the agricultural industry and on farming families."