Business view: The catastrophic effects of a housing crash in never-never land By Jason Nissİ 04 May 2003 Last week's bankruptcy figures from the DTI look on the face of it like OK news. In the teeth of a recession, company insolvencies are falling and personal bankruptcies rose by only 11 per cent. But as with any bit of statistical "good news" from the Government, you have to read the fine print. The reason why fewer companies are going bust is not because the economy is robust, it is because banks are far more reluctant to pull the plug on businesses than they used to libor mortgage libor mortgage be, because they know how these problems tend to multiply. Banks bring in accountants to sort out troubled companies, saving them from administration or liquidation and so keeping them out of the insolvency statistics. Ask any accounting firm whether their "corporate recovery" (or whatever they call it) department is flat out, and you will get a very strong yes. For the poor man on the street, the story is not as good. If you are not a big borrower, it is not worth the banks' while to try to reschedule the debt. It's easier for them to call in the bailiffs. That is why credit union libor mortgage personal bankruptcies are up 11 per cent in the first three months of this year. And while the majority of bankruptcies used to involve people who ran businesses and were pushed over the edge when their companies collapsed, now more than three out of five bankruptcies are thanks to consumer debt. This is no doubt the legacy of the credit boom of the last few years. It has become easier to run up a few grand on your credit card, get a personal loan, top up your mortgage and live high on the never-never. The average Briton is more than ?30,000 in debt secured loans libor mortgage - that's the equivalent of two years average disposable income. Thankfully for our nation of debtors, interest rates are low - and they could be going even lower next week. This means these onerous borrowings are affordable; if you can remortgage at 5 per cent, then your ?30,000 of loans are costing you only ?1,500 a year. But you don't have to be Alan Greenspan to see the problems. First, if interest rates start to rise, the affordability of these loans becomes an ever greater problem. The more defaulters, the more bad debts for banks, the more they have to charge for loans, and debt collectors libor mortgage so the