Young at more risk of insolvency than old

An interesting article from R3 about the difference in attitude between young and old regarding debt and insolvency. This just highlights that younger people are more inclined to see debt as a “way of life” rather than something to try and avoid!

Research from R3, the insolvency trade body, which explores the experiences of people struggling with their debts, reveals that a far higher proportion of younger respondents are more likely to leave their bills unopened and avoid their creditors than older respondents.

• Among those struggling with debt, over a third (36%) of the 18-24 year olds surveyed have not contacted anyone for help as it is ‘easier not to think about it’ compared to just 9% of 55-64 year olds.
• In addition 26% of the 18-24 year olds surveyed say they do not open their bills because they cannot face them, whereas this figure drops down to 10% for 65s and over.
• Similarly 28% of 18-24 years olds surveyed are trying to avoid contact with people they owe money to, whereas this applies to only 11% of 65 year olds and over.

R3’s President Steven Law commented:

“Despite a global recession and near financial meltdown, younger generations are still operating on the basis that high levels of debt are normal and the consequences of this have created a clear generational split. It is extremely troubling that irresponsible attitudes towards debt are entrenched by the age of eighteen as this is likely to lead to a lifetime of financial problems.”
The report also finds:

• Just under a third (30%) of 18-24 year olds cite they ‘don’t know where to go’ as the reason for not contacting anyone for help, compared to 8% of 65 year olds and over.
• Moreover, across all age groups, 44% of those struggling with debts mistakenly believe that debt advice must be paid for.

“If nearly half of those struggling with debts believe incorrectly you need to pay for debt advice, we have little chance of resolving this problem,” added Steven Law. “Most insolvency practitioners, for instance, are prepared to provide their time free for a first meeting with a debtor. Similarly, the Citizens Advice Bureau will provide free advice.”

“In addition, financial advice needs to get away from promoting ‘debt as a way of life’ that some irresponsible lenders use and instead focus on making debt more proportionate to an individual's financial makeup and so avoid long term financial problems,” concluded Steven Law.

This article is attributed to R3 and the press release can be found here.