Friday 31 August 2007

Jasmine Birtles, is the author of several self-help guides to money and runs a website that helps people to get out of debt. With bankruptcies doubling in the past two years, she's never been busier. Jasmine believes one reason is that it's just too easy to obtain loans and credit cards.

Three typical students help her find out just how easy it is. With £32,000 worth of debt between them already and with no income, the threesome hit Oxford Street with the aim of acquiring as many credit and store cards as possible. Within an hour they have already amassed £3,000 worth of credit between them. After a further couple of hours on the internet and telephone, the students have 17 credit cards £7,000 worth of credit between them.

Jasmine argues that people who are already deeply in debt and have no incoming resources to repay it, should not be passing the scrutiny of the lenders.

Jasmine meets Jools Leigh, a manic depressive who is a compulsive spender because of her illness. Unable to work and living off state benefits, Jools nevertheless managed to acquire £28,000 worth of debt over a two year shopping spree. Jools falsely claimed to lenders that she ran her own business and earned £30,000 a year but none of them checked these basic facts. When she was made bankrupt, her lenders were obliged to cancel her debt because of her mental condition. Jasmine argues that proper checks should have protected Jools from her shopaholic condition.

A former bank employee (who asked to remain anonymous) reveals to Jasmine that staff are assigned targets to sign up as many credit customers as they can each day. In particular, he claims that bank employees are encouraged to target people who are already in a lot of debt. "Bank managers will give lists of people's phone numbers to try and target them. 'These people are in bad debt, ring them up and ask them to sell them this product.' So it would be targeting the people who are in specifically bad debt to get into even worse debt."

Jasmine argues that banks and credit companies regard people with a lot of debt as valuable customers, with the potential to earn them lots of money in interest and charges. So there's fierce competition between companies to sign them up.

Andy Banwell, a former bus driver, managed to accumulate £250,000 worth of debt before he was declared bankrupt. He told Jasmine how he would take advantage of introductory offers to shift balances from one card to another to finance a business plan he believed would make him a millionaire. He bought four pub leases and a couple of computer stores on credit cards, thinking he could do up the pubs and turn them into paying propositions quickly. His borrowing went unquestioned by lenders for two years despite Andy having no regular income or assets that could pay off the increasing debts.

With rising interest rates and spiralling debt, Jasmine finds that Britain is a country living beyond its means - and it has to stop.

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