More Brits may face bankruptcy in 2008, warns Addidi

More people in the UK may face bankruptcy or be forced to arrange an IVA (Individual Voluntary Arrangement) this year, Addidi Wealth has said.

The financial planning and wealth management service warns that the global credit crunch may severely affect consumers if credit is not made more easily available.

Research conducted by debt-management company TDX Group and published in April revealed that an estimated one million people are struggling to cope with an average unsecured debt of £25,000, with total UK consumer debt standing at £1.4 trillion.

It was also found that the credit crunch could double the number of people falling into to debt this year.

With the cost of living increasing, as well as the rising cost of mortgages, food bills and fuel, the research shows that the number of people taking out IVAs could double this year.

Anna Sofat, founder of Addidi Wealth, says: “Last year there were already more people declaring themselves bankrupt or having voluntary arrangements with their debtors and I think that will increase this year.”

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Financial websites increased awareness of need for life insurance

Financial websites have helped raise awareness of the need for consumers to take out life insurance, according to insurance experts.

The Association of British Insurers (ABI) said that websites are useful for those consumers who know what sort of life insurance policy they need.

Those that are not aware of the products available should speak to a financial advisor says the body.

However, Nick Kirwan, head of health and protection insurance for the ABI, said: “Anything that helps to spread the message among consumers and provide choice to people… has to have contributed in some way to helping raise awareness.”

The ABI estimated that one in three Britons have no life insurance – and a further one in three have not renewed their life insurance cover for five years, so may be underinsured.

Meanwhile, back in 2005 the Telegraph reported that Swiss Re, the world’s largest life and health reinsurer, estimated that there was a £2.3 trillion ‘protection gap’ between the expenses of UK families and what was actually covered by life insurance policies.

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Debts hitting the young

Debts are hitting the young, with over half of England’s teenagers having experienced debt by the time they are 17, according to a new survey.

The survey, by pfeg (Personal Finance Education Group), found that 90 per cent of teenagers worry about money and spending, and two thirds think about money on a daily basis.

When it comes to overdrafts and credit cards, 90 per cent view them as an easy way to spend more than they earn.

The survey was conducted as part of a schools initiative being mounted by the pfeg in a bid to deliver improved personal finance education to the young.

Wendy van den Hende, chief executive of pfeg, said: “We owe it to our young people to ensure that they have the financial acumen to deal with the responsibilities of being an adult.”

“We firmly believe that incorporating financial education into the existing school curriculum in a way that is relevant to young people’s lives is the best way to help them gain and retain the financial skills they need for the future.”

Consumer debt in the UK has now exceeded £1.25 trillion.

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