More taking the easy way out of debt
Middle class and high income earners are choosing to take advantage of cheap and easy insolvencies to escape their debt. During the three months to March 31 the number of consumer debt agreements entered into skyrocketed up by almost 40 per cent, compared with the same period in 2008. Bankruptcies were also up sixteen per cent, with the vast majority of those being non-business related.
Debt counselors say bankruptcy is relatively cheap and easy option for people who have lost their job and can not repay their debts. "Bankruptcy can be a pretty cheap option if there are no real assets and no capacity to pay," says John Beecroft an insolvency specialist based in South Yarra. A bankrupt person is generally denied credit for three years.
A permanent record of the bankruptcy is placed on the National Personal Insolvency Index (an electronic public register which can be accessed by anyone for a fee "When rates and fuel prices were high we were seeing lots of people from the outer suburbs, now we are seeing more people from middle class suburbs and above. "People who have used their credit cards to buy shares and had a margin call is pretty common," said Beecroft, "or property investments that have gone wrong."
Source: Herald Sun