I’m a great fan of a character called Martin Lewis, the self-styled Money Saving Expert of radio, TV and the net. He knows how to play the financial services system to find good deals for clued-up punters.
He also urges people to be responsible and prudent in getting out of debt and living within their means.
But I believe he might be missing a trick. He has yet to spot the bargain of the century for people with a wardrobe full of designer clothes they can’t really afford, the memories of a holiday in Las Vegas and brand new replica England kits for the kids.
And the bargain is this. You don’t have to pay for it all. For the "spend generation", where you get what you want and don’t live with the consequences, the panacea to the mounting bills is simply to become insolvent - through something called an individual voluntary arrangement (IVA).
All it takes is a session on the internet filling in details about personal circumstances, then a consultation with an insolvency specialist and then filing through the court to stop those nasty credit card companies from sending any more bills. The clothes still fit, the car still runs well and the house isn’t going to be repossessed - and the bank are willing to let the punter pay about 40p for every £1 they owe.
It might be a tall order to expect someone who has displayed very little personal responsibility to knuckle under a more rigorous financial regime, but that’s one of the requirements of a system run by qualified and regulated insolvency practitioners, as opposed to, say, a loan shark.
Close watchers of the Alternative Investment Market (AIM) cannot have failed to notice the prevalence of companies in this parish offering personal insolvency services and joining AIM. Investors love the success of Chorley-based Debt Free Direct, which floated at the back end of 2002, while others have followed the stampede to the stock market and seen their share prices soar - Accuma, Debtmatters, Clear Debt. Companies offering loans to people the banks won’t touch - like Bury-based Compass Finance - have expanded to offer IVAs to people who think "one last loan might just do it".
So, just as your insurance premiums go up because insurance companies settle bulk claims, however spurious they know them to be; and as you pay off your credit card every month and live within your means, but wonder why you need the help of Martin Lewis to avoid creeping charges - there’s why. Enjoy the summer.
(Lead article, Insider, August 2006)