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EDITOR’S BLOG: Easy credit, debt and the IVA man

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The figures from the Insolvency Service make grim reading. More than 30,000 people went bust in the first three months of this year, a new record, although it’s not one anyone should be boasting about.

Quite the opposite really. Broken down into its component parts, of the 30,075 people who went bust between January and the end of March 16,842 people went bankrupt, while 13,233 chose an Individual Voluntary Arrangement (IVA), the equivalent of a parachute for the financially irresponsible who chuck themselves out of a safe life with their lack of self-control.

And, let’s face it, many of that 30,075 have only themselves to blame for their predicament, try as they might to shift it to everyone else and life in general. Back in harsher times going bust was equated with moral bankruptcy and people tried their hardest to avoid it. Nowadays, advertisements for debt management companies come across like invitations to a brave new life, complete with stirring music, smiling advisers, relieved debtors, and, usually, an authoritative man in a suit telling you how wise you would be to put all your rotten eggs in his basket.

Is anyone to blame for any of this? No way, as guilt has been supplanted by a bemused complacency of the type that shrugs it shoulders and says ‘Look here, none of this is my fault, you know’. No one so much as wags a finger although, far away in the background, you might hear the muted grumbling of lenders that had to write off £1.4bn last year because of people who took the money and ran themselves into the ground with it.

Jim, who lives in Surrey, is fairly typical of the new breed of unabashed knockers (a slang term for those who default as a matter of principle). “I had one credit card for years and paid it off religiously,” he says. “Then I met my partner and she was a big spender. I had to dig deep to keep her happy with the finer things of life. She wouldn’t even drink a glass of wine unless it came from a bottle that cost a minimum of £50.

“Anyway, I started to send off for more credit cards from the forms that dropped on my mat every day – the credit companies seemed to be desperate to get me to sign up for their card. Before I knew it I had about 10 of the things and was taking out money from each one to pay off the balance on others. That’s about as vicious a circle as you can get and I soon hit the buffers with an almighty bang. From being my ‘friends’, the credit card firms started showing their teeth and I was surprised how hostile some of them got. So did Kelly (his partner) come to that, once the money ran out.”

It says a lot for Jim’s sense of morals that he was “surprised” the credit card companies turned “hostile” once he had effectively announced his intention to steal their money, but there you go, the conscience is as easy as the cash in today’s laid back, blame-free society. Anyway, off he went to an IVA firm and is paying back a little of what he owes with the prospect of having most of it written off in the near future.

Still, the IVA companies are coming under the stern gaze of the authorities, and the Office of Fair Trading recently wrote to 17 of them, warning them to stop churning out ‘misleading’ advertising on TV and in the papers.

But really, this is just scratching the surface of a problem that shows a society losing its sense of responsibility and, in many ways, its sense of worth. That’s what the debt culture is really eroding and we all have to live with the consequences of that.

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