Official figures released by the Insolvency Service show that 25- to 34-year-olds are the single biggest group using debt relief orders (DROs).
Since DROs were introduced in April 2009, 44,000 have been granted in England and Wales, with 1 in 4 of those resorting to a DRO aged between 25 and 34.
If you have debts of up to £15,000 and are struggling to make the payments, have no more than £50 disposable monthly income, have savings and assets of less than £300, and don’t own your own home, a DRO enables you to write off your debts.
The figures show the extent to which young people are suffering in the current economic climate, and it has been suggested that increasing student debt could make the situation worse. Student loans aren’t covered by DROs, but they are often a contributing factor when a young person becomes insolvent.
According to Joanna Elson, chief executive of the Money Advice Trust, financial realities don’t match up with the expectations many 25- to 34-year-olds grew up with – “at the same age their parents would most likely have bought their first home, have a comfortable pension lined up, and be saving for the future. For today’s 25-34 year-olds the picture is much bleaker,” she said.
The Insolvency Service’s figures indicate that, over the last 2 years, 1 in 3 people under 25 who were granted a DRO owed less than £5,000, whilst other age groups tended to owe more. 40% of those aged over 25 owed between £10,000 and £15,000.