Older People Facing Increased Debt Difficulties
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An increasing number of older people are struggling with their finances, new UK figures reveal. According to a study released by Wilkins Kennedy, the level of retired people claiming bankruptcy has more than doubled over the past five years as they become unable to pay off loans, credit cards and other demands on their finances. This year, those who are in retirement are to account for seven per cent of all bankruptcies - an increase from the three per cent recorded five years ago. Overall, some 7,900 pensioners have filed for insolvency during the last 12 months. However, in 2002 this figure stood at 900.
The accountancy firm indicated that as the average life expectancy rises, consumers are finding it more difficult to manage their “limited savings”. As a result, Wilkins Kennedy reported that pensioners are seeing fuel and food price rises placing “short-term pressure” on their finances. Meanwhile, more people are becoming unable to meet payments on loans, credit cards and other forms of debt as their income falls upon giving up work. It was also suggested that getting a divorce, especially for those who do so just before retiring, can hit people’s capacity for money management “hard”.
Meanwhile, a higher-than-expected level of pensioners are claiming bankruptcy in rural areas as they are unable to pay off debts accrued via personal loans and other means. This was partially attributed to the reduced availability of part-time work in such regions of Britain which could help supplement consumers’ income. It was also suggested that a shortfall of free public transport in the countryside could be putting more pressure on older consumers’ finances.
Commenting on the data, Keith Stevens, insolvency partner for Wilkins Kennedy, said: “More and more pensioners are going bankrupt as they struggle to repay debts when their pension is their sole source of income. Although attitudes towards bankruptcy have changed dramatically since the days of debtors’ prisons the older generation still feel the stigma of bankruptcy and are reluctant to ask for help until it’s too late.”
The insolvency expert stated that those who have entered the cycle of remortgaging their property so as to pay off their credit cards may now find that they are unable to escape their debts. In addition, he reported that a number of financial services providers were becoming stricter in issuing money to those looking to apply for a loan and raising mortgages rates “as the credit crunch really begins to take hold”. Mr Stevens also asserted: “This could signal financial disaster for those who have refused to rein in their spending despite all the warning signs.”
Those who find that the struggles encountered in managing their finances have damaged their credit history, consequently could find their access to cheap loans and other forms of competitive credit impaired. However, those consumers who are confident that they will be able to afford to make repayments may wish to consider opting for bad credit loans ahead of filing for bankruptcy or another means of insolvency, as doing so may help them to avoid further damage to their financial file.
Meanwhile, James Cotton, mortgage specialist for London & Country, reported that UK consumers who have experienced difficulties making borrowing repayments should shop around if looking to take out a loan again as they may still be able to get a competitive rate of interest.
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Abbi Rouse writes for All About Loans where visitors can apply for personal secured loans and also focuses on loans in the UK, and fast secured loans for UK Homeowners.
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