Statistically, the number of people going bankrupt in England and Wales rose by 2.5% in the first quarter of the year, with experts warning that there is still ‘no light at the end of the tunnel’ for many people, despite the apparent upturn in the economy as a whole. In the first quarter of 2014, 24,931 individuals were declared bankrupt which is higher than the last quarter of 2013, but happily is down by 0.3% over the same period one year before. The figures have been inflated by more people choosing bankruptcy – the numbers rose 4.8% compared to the previous quarter, rising to 5,671.
Many people are still struggling
Charles Turner, chairman of the Insolvency Practitioners Association (IPA) and a partner at FRP Advisory, warns, ‘For a lot of consumers there is no light at the end of the tunnel and they will need to deal with their personal debt crisis by opting for a personal insolvency solution.’ The IPA have recently released figures that show that 2013 showed a reduction in the numbers of people choosing personal insolvency; the total of 101,000 cases in the whole year is the lowest for eight years, helped by the low interest rates. Bankruptcy is seen as a last resort, with other types of insolvency – debt relief orders (DRO) and individual voluntary arrangements (IVA) being more common. They are both aimed at those with smaller amounts of debt but with no real chance of paying it off and so creditors are approached to agree payment terms. DROs have dropped in number by almost 10% to 6,549 compared to the same quarter in the previous year, but IVAs have increased, up nearly 15% to 12,711. An IVA typically takes five years to see through to completion.
Regular payments are much lower
Giles Frampton, president of insolvency trade body R3 has been quoted as saying that it is ‘important to understand that the official statistics do not tell the full story about insolvency in England and Wales. The Debt Management Plan (DMP) industry has ballooned in size in recent years, but the number of people in DMPs remains unknown.’ He added that his personal experience suggests that IVA plans now have much smaller amounts taken as regular payments, down from an average of £200-250 a month to as little as £50. He is joined in his concern for people’s personal financial standing by Peter Tutton, head of policy for StepChange debt charity who feels that millions of households’ finances have been stretched to breaking point and that many are using credit simply to make ends meet.
There is no need to struggle on alone
Dissolve Debt has had many years’ experience in helping people to get their finances back on track. If you are worried about money and feel that your situation has got out of hand, give us a call on 0800 0122 111 (0161 926 7670 if you are calling from a mobile) and one of our experts can talk you through what the best option for you would be – then you can stop worrying and start to improve your financial health.