Insolvency figures show ‘big problem’

PUBLISHED: 13:30 24 June 2016

Archant

More people in North Somerset are being forced into insolvency than almost anywhere else in the country, new figures have shown, but it is claimed the underlying problem is ‘much bigger’.

In 2014, there were 479 new cases where people struggled with debt so much they were deemed legally unable to pay back what they owed.

The figures are made up of people who have chosen to take one of three routes in order to relieve their financial situation.

Fiona Cope, chief officer of the Citizens Advice Bureau in North Somerset, told the Mercury the area’s financial situation is even worse than the figures suggested.

She said: “When looking at these figures, we actually thought they looked lower than we thought.

“This is because this only contains people who have filed for insolvency.

“There are a number of people who cannot afford to go bankrupt or can’t have a debt relief order as these are for people with no assets.

“This is a much bigger problem than people think in North Somerset.

“Some of the places which have the lowest amounts of insolvency have double the population of North Somerset – say Wandsworth, in North London.

“The problem in North Somerset is there such a massive difference in affluence in the area.

“It is true that insolvency can affect the rich or poor – but these figures will undoubtedly be affected.

“Also, people find a house, or something expensive, which they can afford – but then something happens which is out of the ordinary and was not factored into the budget.

“More often than not, it is not someone being irresponsible.

“It is usually something which the person had not accounted for and that is where problems often begin.”

The figures include people who have filed for bankruptcy, which is a form of debt relief which seizes a person’s assets, and is for anyone who is unable to repay their debts.

It also covers those who have taken out a debt relief order, which is available for those with a low income, a low amount of assets and debts of less than £15,000.

Personal insolvency also includes people who have taken the route of an individual voluntary agreement, a voluntary way of repaying creditors some, or all, of what they are owed.

But while the figures have shown a steady decline, they are still much higher than other areas of the country, with 508 cases reported during 2014 and 640 in 2013.

The Money Advice Trust, a charity which helps people find advice on dealing with personal debts, told the Mercury the improving economy should help lower the amount of people who are in this position.

Jane Tully, director of external affairs at the Money Advice Trust, said: “The more or less downward trend in insolvencies in North Somerset since 2009 is welcome news.

“It is a sign that more people are feeling the benefits of the improving economy.

“However, we must not lose sight of what could lie ahead.

“By 2020, household debt is forecast to pass its pre-recession peak of 169 per cent of household incomes, with consumer credit already rising significantly.

“While many households will be able to shoulder any extra borrowing they take on, we remain concerned for the significant minority who will turn to credit to shore up their finances.

“We would urge anyone in North Somerset who is concerned about their financial situation, or is worried about dealing with their debts, to contact a free charity-run service as early as possible.”

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