Debt charity warns insolvencies could rocket 20 per cent
A UK debt charity has warned that the debt crisis looks set to escalate again, despite the latest figures indicating a drop in personal insolvencies.
According to Debt Advice Foundation, the country is experiencing the ‘calm before the storm’ and predicts that the number of people facing insolvency could rocket by 20 per cent following the outcome of the Government’s spending review.
With speculation that 500,000 public sector jobs could be lost by 2014, the charity believes that although personal insolvency figures have now fallen for the second consecutive quarter, the country is still sitting on a financial time bomb.
David Rodger, Managing Director of Debt Advice Foundation, explains: “Although 2010 has seen a reduction in the number of people becoming insolvent, the prospect of half a million public sector jobs being cut with little hope of the private sector picking up the slack, unfortunately means that the worst could be yet to come.”
Last year saw the highest number of personal insolvencies on record and despite the current reprieve; the potential job losses could push insolvency to an all-time high.
Mr Rodger continues: “Although insolvency volumes are the product of a number of contributory factors, unemployment, particularly new unemployment, is a key determinant. If the predicted spending cuts go ahead we could see insolvencies rise to in excess of 40,000 per quarter, which is 20 per cent higher than present levels.”
About Debt Advice Foundation
Debt Advice Foundation’s telephone helpline service is available six days a week on 0800 2922077, lines are open from 8am-8pm Mon-Fri and 9am – 5pm on Saturdays.
· Debt Advice Foundation is a registered charity, with the following objectives:
· Provide free, impartial and appropriate advice to people with unaffordable debt.
· Help people with debt problems to gain free access to solutions that will help them.
· Promote the education of young people in money management so as to reduce the likelihood they will mis-use debt later in their lives.
· Undertake or fund research to understand why problem debt happens and its effect on individuals, families and the wider UK economy.
· To use this evidence to become a force for beneficial change within the credit and debt solutions industry and to work with government to bring about legislative change to benefit UK consumers.
· Debt Advice Foundation features on the FSA (Financial Services Authority) consumer website – Money Made Clear (www.moneymadeclear.org.uk) and Direct Gov (www.direct.gov.uk) as a source of free and impartial debt advice.
Source: creditman.co.uk
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