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BankruptcyNews
Junior Member
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 Posted - 26 March 2007 : 09:34:43
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Students adding to bankruptcy tally
STUDENT debt is becoming a bigger contributing factor to personal bankruptcy, with more young people graduating with substantial borrowings.
However, the exact contribution of student debt to bankruptcy - or sequestration as it is technically termed in Scotland - is difficult to measure.
While the Accountant in Bankruptcies maintains the Register of Insolvencies in Scotland, it does not hold statistics on how many debtors were student borrowers.
Bryan Jackson, corporate recovery partner at PKF, said: "It is clear that many people are graduating from university or college with substantial debts, which they may take years to clear. Unfortunately, many will incur further debts before their student debt is cleared and consequently may get themselves into serious financial problems.
"Encouraging students to get into debt is a bad and contradictory message when what is required is early education in how to manage your finances and the consequences of taking on debt."
PKF has found that individuals who are being sequestrated or are taking out protected trust deeds (PTDs) as an alternative are getting younger each year and have larger debts.
"Starting your working life with a large debt is undoubtedly a burden which many find difficult to cope with. The pressures to have everything immediately, whether it be a house, car, or a wide-screen TV encourages people to spend without thinking too deeply of the consequences," Jackson added.
When figures on sequestrations are combined with those on PTDs, an increasingly common means of dealing with severe indebtedness, the number of people in serious financial trouble becomes clear.
Jackson said: "Since 2000 the number of those taking out a PTD have exceeded those being sequestrated and that trend has increased in the last six years, making 2006 the highest figure ever for bankruptcies, with a total of 13,638.
"What is required is a realisation among all people, but particularly the young, that it is very easy to run up debts but much harder to clear them and that bankruptcy is a very serious option which will have a long-term impact on your ability to buy a house or car or be involved in any form of credit."
SOURCE: ROSEMARY GALLAGHER PERSONAL FINANCE EDITOR (Scotsman.com)
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Students adding to bankruptcy tally
