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Paying a high price.

Byline: By Adam Jupp

Bankruptcies soar as interest and debt rates bite

Soaring debt is being blamed for dramatic rises in the number of people declaring themselves bankrupt.

Latest Government figures show the number of voluntary bankruptcies in the North East rose nearly 15% in the last year.

More than 400 people were declared broke in the year-quarter leading up to September of this year.

Three-quarters of these had petitioned for voluntary bankruptcy. Insolvency experts say increasing levels of debt can be blamed for these figures.

Paul Bateman, regional head of personal insolvency for accountants, KPMG, said: "High levels of personal debt, fuelled by consumer credit and rising interest rates, are driving the continuing increase in bankruptcies.

"As these figures reveal, more people are making themselves bankrupt which suggests bankruptcy is now seen as a more acceptable way of dealing with debt difficulties."

A total of 417 people were made bankrupt in the North East in the third quarter of 2004, compared with 363 for the same period in 2003.

The new figures, published by the Department for Constitutional Affairs, reveal just 85 of those made bankrupt this year did so against their will.

There have been a number of high-profile bankruptcy cases in the region in recent years.

In July, soccer-mad Paul Withycombe filed for bankruptcy having risked everything to save his local football team.

Paul, 38, acted as guarantor for a loan taken out by his beloved Ryton Football Club so they could build a new clubhouse at their ground in Gateshead.

He was then faced with the prospect of having to stump up almost pounds 50,000 after the debt was called in.

In March, pub landlady Kendra Roddam was made bankrupt after amassing debts of pounds 147,000.

Kendra, who ran the Empress pub on The Side, in Newcastle, owed money to the Inland Revenue and had debts for business rates and bank account charges.

Mr Bateman thinks that many people will choose to go bankrupt because of new laws meaning the order only lasts for one year.

He said: "We may be entering a period when this level of bankruptcies of becomes the norm.

"I suspect this is a result of the perceived simplification introduced by the Enterprise Act in April this year, which allows more people to be discharged from bankruptcy after 12 months, or in some cases less, whereas three years was previously the norm."
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Publication:Evening Chronicle (Newcastle, England)
Date:Nov 12, 2004
Words:402
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