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ASHOCKING snapshot of bankruptcy in Scotland has revealed that most of those struggling with debt are aged under 30 and owe up to pounds-60,000 each.

The startling figures emerged from a study by one of Scotland's leading insolvency firms and also showed that credit card debt was the primary cause.

Bryan Jackson, insolvency practitioner and managing partner of PKF Accountants and Business Advisers, conducted an in-depth analysis of his recent cases and found that 60-per cent are aged under 30 and owed up to pounds-60,000 each.

Jackson has around 1000 open personal insolvency cases on his books currently, and receives 30 new ones each month, with PKF handling around 10-per cent more cases year on year. He has issued a stern warning about the soaring numbers of young people who are facing bankruptcy, and has called on the Scottish Executive to face up to the problem ahead of an expected further relaxation in bankruptcy laws.

He also warned that the credit-card crisis will intensify if the slowdown in the housing market materialises. He said: "It is absolutely horrendous, not for me, because it keeps me in business, but as a country we have to realise that credit card abuse is leading young people into debt.

"We need more education and something needs to be done to restrict lenders. You are offered credit everywhere you turn, and for some people, particularly the young, it is too tempting."

Jackson said that part of the problem is the stigma associated with chronic debts and bankruptcy has disappeared.

"Before 1913, if you owed anyone money you went to jail.

That was relaxed but you remained a bankrupt all your life. This changed in 1986, when it could be discharged after three years and was relaxed last year in England to one year to encourage entrepreneurs. But it isn't businesses going bankrupt, it's personal bankruptcies which have soared. " Jackson believes that similar bankruptcy rules will come into force in Scotland within the next two years, which will worsen the situation. He said: "In anticipation of this, I would encourage credit card companies and loan providers to adopt more responsible lending practices. I would also urge the Executive to take a pro-active approach to educating Scotland's young people about how better to manage their finances."

Today's debt crisis is not associated with traditional debt cycles which have historically been triggered by unemployment or a relationship break. All of the people aged between 20 and 30 involved in PKF's recent personal insolvencies were, without exception, in full-time employment.

Jackson blamed our materialistic and increasingly consumer- driven society. He said:

"Lifestyle expectations have soared. The 'buy now, pay later' ethos has been readily adopted by the younger generations, perhaps as a result of targeted advertising. Regardless of whether they can afford it, many people are enhancing their lifestyle and funding their purchases by means of credit."

PKF's cases in the 20 to 30 age range showed minimum debts of pounds-7000 with the worst spendthrifts clocking up loans of up to pounds-60,000. Many of his clients fell further into debt during the insolvency process by continuing to use credit cards.

According to Scotland's Insolvency Service, the number of insolvency cases in Scotland has risen from 5538 in 2000 to 8978 in 2004. Last year, Citizens' Advice, Scotland (CAS) dealt with a total consumer debt of pounds-130 million.

Ian Brown, spokesman for CAS said: "Consumer debt is the single biggest issue we dealt with last year and we are seeing more young people at our bureaus. One reason is because there is so much more pressure on young people to buy designer labels but, also, students are getting into debt from the age of 18 and are therefore getting used to debt from a very young age."

Alasdair Morgan, deputy convener of the Scottish parliament's finance committee and SNP shadow finance minister, said: "Financial affairs are more complicated than they have ever been and people are under increasing pressure to take out loans and credit cards, but there's not the training provided to make people ready to cope with that. This is a growing problem, and it's something the government should take a hand in solving."

A spokesman for the Scottish Executive said: "We are working on a number of fronts to increase financial awareness and education and do provide assistance to those in debt and facing bankruptcy. This help includes financial education in schools, money advice services and will include the Debt Arrangement Scheme [a new programme to help people in debt]."

MY CARD WASN'T FOR LUXURIES . . . JUST FOOD AND RENT

STEPHEN Russell, 26, is a journalist from Glasgow. At one point, he was juggling five different credit cards.

He said: "It started when I was in second year at Glasgow University. I went to the bank to see about my overdraft and they suggested I take out a credit card.

"They pitched it like it would give me that little bit extra that I could pay off at the end of the month. But, of course, as a student with a weekend job, I could only ever pay the minimum amount. I left university in 2001 and moved to London to do a masters in journalism. I had two credit cards maxed out at pounds- 1500, four student loans amounting to pounds-7000 and my overdraft at its limit. In London, things got really bad, but I wasn't using my cards for luxuries - just for food and paying rent.

# posted by Medical Information : 3:22 AM