Personal Debt Figures Are ‘Deeply Disturbing’

A leading debt charity has described the latest personal insolvency figures from the Office of National Statistics (ONS) as ‘deeply disturbing’ as the trend for indebtedness is still rising.

Although the ONS figures show a slight reduction in the number of personal insolvencies, the number of people seeking bankruptcy or IVA solutions has risen every quarter since October 2007, with the rising tide of insolvencies stretching early into the last decade.

For example, there were 15,369 insolvencies in the first half of 2000 whereas the first half of this year saw 70,425 insolvencies – an increase of more than 458 per cent over the last ten years.

Rising numbers of insolvencies is having an impact on society and the well being of individuals and families.

“We need to make sure, for our social and economic well being, that unmanageable debt is reduced as far as possible, and that is why we have been working closely with government and financial services providers to help ensure those that are struggling have access to the necessary help and advice.”, Paul Crayston, spokesperson for the Money Advice Trust, a debt charity.

“The role of advice agencies at this time is more crucial then ever, our own research at National Debtline – the free helpline run by the Money Advice Trust – has indicated that it will help individuals carrying a total of around £3.8bn of debt in 2010, and that our advisers will help these people pay off around £2.75bn of that debt in the next seven years. Organising a sensible and realistic debt repayment plan can help prevent unnecessary insolvencies.”

Tim Moss, head of loans and debt at moneysupermarket.com also expresses concern about the high level of personal indebtedness:

“On paper this looks like great news, however I’m inclined to see this as the calm before the storm. Many people are just about making ends meet due to the low Bank of England interest rates keeping the cost of mortgages down. However, the only way base rate can really go is up, and when this happens we could see many households tip over the edge as a result.”

“With job losses in the public sector, VAT rises in January and the cost of living increasing, we may see many households plunge into further difficulties so although we should welcome the drop in insolvencies, we shouldn’t assume we are out of the worst of it.”

source: Moneyhighstreet