Bankruptcy Woes of the Over 45s

A recent study suggests that it is not only the excessive spending of the young and reckless that can lead to bankruptcy. Startling figures show that it is in fact the supposedly sound heads of the over-45s that are actually experiencing the greatest increase in the number of bankruptcies.

Between 2004 and 2008, the UK has seen a dramatic upswing in the number of individuals over 45 that are filing for bankruptcy. In this period, the number of people initiating bankruptcy procedures has risen from 10,600 to 23,800. That’s an increase of 124% in four years. The total number of bankruptcies in those four years has seen an increase of 89%, which is still a staggering jump but nowhere near the figure recorded by the over 45’s.

The reasons for this increase are varied but the main contributing factors would appear to be the effect of multiple marriages, such as increased divorce and remarriage rates, combined with the recent trend in plummeting house prices. These factors, although not solely the reserve of the over 45’s, have had a disproportionate effect on the financial security of those widely considered to be more ‘settled’. These figures, derived from research carried out by the Insolvency Service, have highlighted a substantial increase in the number of second and, in some cases, even third marriages. If we look back to 1980 we can see that one in ten of those people who were going through divorce proceedings had been part of a previous marriage that had also ended in divorce. Fast forward to 2007 and that figure had doubled, to one in five.

So, there may well be additional numbers of children and ex-wives or ex-husbands that also need their financial support. People might well find themselves in a situation where they are contributing to the mortgage repayments for their ex-partner’s home, paying for child care and covering maintenance costs of their first marriage at the same time as supporting their new family, be that by paying a second set of school fees, a second mortgage or any other duplicate outgoings.

Exacerbating this added expense is the recent drop in house prices. Many of those who would have previously exploited the equity in their homes in times of finance difficulty are now finding that they simply don’t have the stake necessary to remortgage.

There are other finance streams open to those people who find themselves in this difficult situation. If you find yourself in this predicament, talk to a dedicated debt advisor as soon as problems manifest. You’ll find that your creditors could be willing to come to an understanding with repayment schedules and alternatives if you are open with them. There are alternatives to bankruptcy, like an Individual Voluntary Agreement, or IVA, so get advice about the best course of act ion for you.