Recession ‘hit all but richest’

Nearly everybody has been hit by the recession in one way or another, life coach and mentor Annette Greenwood has remarked.

Commenting on the impact the economic downturn has had, she said: "The recession hits us all unless you are wealthy. Individuals and companies alike can go bankrupt having lived beyond their means."

Individual bankruptcy is a fate many will have suffered as their financial fortunes have plunged, with the potential for this to be made public as bankruptcies can be reported in the local press.

Those who are in deep financial difficulty may, however, opt for an individual voluntary arrangement (IVA). This can be used by anyone with debts of around £15,000 or greater. Unlike going bankrupt, it is a confidential agreement, so it favours those who do not wish for their financial affairs to be made public knowledge.

While bankruptcy may see all or most debts cancelled, an IVA works by agreeing reduced payments with creditors, to be paid back in regular and even amounts over a period of five years or less. St the end of this time, any remaining debt is written ff.

However, the deal must be accepted by at least 75 per cent of creditors to become binding. 

Unemployment may be one reason some people have found their finances have deteriorated, but it may not be the only one.

Ms Greenwood observed: "Businesses have streamlined, continually cutting back to increase their bottom line. As redundancies have been made remaining employees have taken on additional responsibility in many cases with less hours and pay."

Others may have found that while their hours remain the same, their pay rates have not kept in line with inflation or have been frozen, with the net effect of all these reductions in income meaning people who remain in work could still find it harder to make ends meet and keep up debt repayments.

The extent to which incomes have fallen was revealed this week in the Office for National Statistics (ONS) Measuring National Wellbeing survey, showing personal incomes have fallen by 13.2 per cent in real terms.

Such a drop is worse than expected, the ONS stated. 

Posted by Paul Thacker