THE number of people declared insolvent in Wales has risen for the seventh successive year, as the impact of heavy credit card borrowing hits consumers, the Insolvency Service revealed.

There were 2,968 bankruptcies in Wales in 2007 – a 168% increase on 2000. A total of 2,218 – a huge 446% increase over the same period – chose an Individual Voluntary Agreement (IVA), a controversial alternative that freezes debts and usually writes them off after five years. IVAs were designed to help small businesses but have become increasingly popular with individuals. The highest rises in the use of IVAs by individuals in Wales were in Rhondda Cynon Taf, Cardiff, Swansea and Flintshire.

Separate research from the Skipton Building Society suggests three quarters of young people are struggling with debt, with one in five admitting they spend more than they earn each month. Around 74% of under-35s are in the red, owing more than £9,000 on average, while 12% owe more than £20,000.

Half of young people have debts on credit cards, while a further 33% have a student loan, 28% have a bank loan and 12% owe money on store cards. And 12% also owe money to their parents and 4% borrowed cash from other relatives.

Jenny Willott, the Liberal Democrat MP for Cardiff Central, said, “Labour’s economic boom is turning into financial bust for an increasing number of people right across Wales. Personal debt levels in Wales have swelled beyond recognition over the last 10 years.

“High interest rates are hitting an increasing number of Welsh families who have borrowed heavily to meet the rising cost of living and spiralling house prices.

“We must tackle low financial literacy levels and meet the growing demand for independent financial advice.” A network of free financial advice centres could be created.

The Association of Business Recovery Professionals’ Nick O’Reilly said, “The Government is out of step with how bankruptcy is used in this country. They don’t seem to understand that it is now mostly used by private individuals to get relief from personal debt.”


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