Personal bankruptcies have been the big story in debt advice over the past year. The new rules introduced in England and Wales (but not Scotland) in April 2004 mean that most people are discharged from bankruptcy in twelve months rather than three years. The general public have been quick to latch on to this, and many clients have been asking us for bankruptcy advice as a first, not a last, resort.
A 'quick fix' is not always a good solution. The Bureau has hauled many back from the brink, by pointing out that they may lose their homes, or their jobs, or that the debts they owe are of a type which will not go away even after bankruptcy. There remain, however, many people for whom this is the answer to a prayer, drawing a line under the past and enabling them to make a new start. This is particularly true for the very poorest, the long term sick, and those in low paid jobs or likely to remain on benefits for the foreseeable future. We are particularly grateful to the Anglian Water Trust Fund, which has assisted many of the neediest with the bankruptcy deposit.
One memorable morning, two separate clients walked into the Bureau, each of whom owed well in excess of £100,000 in unsecured debt. Neither client was a home owner or had any substantial assets. It seems extraordinary that the banks had encouraged them to incur more loans to repay debts, until they reached a level which could not possibly have been repaid. We have seen many more in this situation.

On 9 May 2005, "The Real Story" on BBC1 made an exposé of how one of the major banks encouraged customers to go in over their heads, as bank employees' job security and bonuses hinged on how many loans they could sell. The devastation which this type of policy can cause to the lives and mental health of the borrowers who have been seduced into it is immeasurable.
The way in which cases have been recorded on the computer system CASE, has not allowed for the detailed breakdown that we usually make for the various types of debt, and it is not possible to make direct comparisons with figures collected on a different basis.
Of the 271 clients recorded as presenting with debt problems, 130 did not disclose the full amount that they owed. The remaining 141 reported a total debt of £3,508,354, which gives an average debt per client of £24,882. The corresponding figure for last year was £11,000. Without the detailed breakdown, we do not know for certain what has caused this explosion of debt, (an increase of more than 126%). However, it would appear that there has been a big increase in credit card debts, fuelled by offers of 0% balance transfers. We have seen a number of clients with multiple credit card debts, often using one card to pay off another, without realizing that they are therefore paying two lots of interest on the same amount of money. They have also been repaying minimum amounts, which make little impact on the repayment of the total debt, and if their circumstances deteriorate, they are left with an amount they are unable to pay. Perhaps this explains why so many are now taking refuge in bankruptcy.

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