Online debt test to warn of cash crisis

The UK’s appetite for unsustainable champagne lifestyles is set to be diluted later this year with the launch of an online “debt test.”

The test, which will be available via a custom-designed internet site, will be opened to the public so consumers can assess whether they are likely to run into borrowing difficulties.

The news of the service comes on the back of data released last week showing more than 15,000 businesses filed for bankruptcy in the second quarter of 2005, a 36 per cent increase on the same period last year.

The figure also represents an 11.7 per cent jump on the previous quarter, despite separate research revealing four-fifths of entrepreneurs predict good times for the year ahead, according to Bank of Scotland findings.

Mike Gerrard, a personal insolvency specialist at Grant Thornton , told the Sunday Telegraph that the UK’s mountain of personal debt continued to have no peak in sight.

“The problem rests squarely in excessive credit and storecard use, personal loans and often unsustainable champagne lifestyles,” he said.

Last week’s quarter-point interest rate cut would do little to relieve the burden for people with hefty debts, Gerrard added.

The Financial Services Authority, which is launching the service with the Council for Mortgage Lenders, said the debt test would promote better understanding by consumers of their credit position and therefore would reduce the likelihood of them experiencing difficulty with financial payments in the future.

In the meantime, freelancers, consumers and entrepreneurs can access the FSA’s Credit and Debt loan calculator, which can be accessed below:
http://www.fsa.gov.uk/consumer/04_CREDIT_DEBT/loan_calculator.html



 

8th August 2005

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