The Insolvency Service have recently released figures to show women aged between 18 and 24 are nearly twice as likely as men in the same age group to find themselves insolvent.
Nearly 8 women in every 10,000 people, compared with a ratio of 4 in 10,000 for men in the 18 to 24 age group, became insolvent. In the 25 to 34 age group, the personal insolvency rate for women was 33 per 10,000 adults while for men the ratio was 26 in every 10,000.
Interestingly, after aged 35 the pattern is reversed and more men are likely to become insolvent than women.
The financial problems of young women have recently been highlighted by TV personality Kerry Katona who has been declared Bankrupt despite her high earning. She recently talked about her debt problems in a TV advert for a payday lender.
The Insolvency Service said that the trend for more insolvencies in young women can partly be explained by the introduction of Debt Relief Orders (DROs) in 2009. These are aimed at people with less than £15,000.00 in debt with minimal surplus income each month and no assets. The Insolvency Service said a much higher proportion of debtors with DROs are female compared with Bankruptcies and Individual Voluntary Arrangement (IVAs), the other two by-products of personal insolvency.
More women becoming insolvent is certainly a social change in Britain; from a time when an insolvent woman in her 20s was a rarity to today’s debt explosion.
Aggressive advertising campaigns by ‘pay day loan’ companies, ironically with Kerry Katona spearheading the advertising, have been criticised by some for encouraging women to spend on luxuries they cannot afford.
It has been suggested that a larger number of young women becoming insolvent compared with men is likely to be a hangover from the pre-credit crunch era when people were making their income stretch further by taking our credit. There certainly seems to be a pattern of spending differences – perhaps due to lifestyle changes over the last 10 or 20 years. It may be that the celebrity culture is having some influence on spending habits; with women trying to emulate lifestyles they cannot afford.
In addition, advertising is becoming more specific and aggressive, advertisers now target potential customers using mobile, social media and on-line advertising to promote borrowing and spending.
Women who become insolvent have the same insolvency options as anyone else of course. Personal insolvencies are made up of Bankruptcies, Debt Relief Orders (DROs) and Individual Voluntary Arrangement (IVAs) where money is divided and apportioned between creditors.
Many women will opt for an IVA, a form of debt management established in 1986 as an alternative for individuals wishing to avoid Bankruptcy. They are a formal repayment proposal presented to the debtor’s creditors via an Insolvency Practitioner and seen by many as an option that does not attract the same stigma as being made bankrupt.
Certainly, however, there is noting attractive or glamorous about having debts to the level of becoming insolvent. Maybe high profile stars like Kerry Katona or Martine McCutcheon should engage in debt awareness and advertising rather than endorsing the ‘have now – pay later’ culture of pay day lenders.