Bankruptcy falls but thousands still vulnerableFall in insolvencies, except in Northern Ireland

06 May 2011

Man in debt with bills

The number of personal insolvencies in the UK has fallen, but there are still thousands of families struggling with debt

The number of personal insolvencies in England and Wales has fallen by 15.5% compared with the same period last year. In Scotland the fall is 18%, while in Northern Ireland the number of cases has increased by almost 25%.

The number of insolvencies breaks down as follows:

  • England and Wales: Down from 25,682 in the first quarter of 2010 to 30,162 in 2011;
  • Scotland: Down from 5,200 to 4,262;
  • Northern Ireland: up from 554 to 692.

Take independent, free debt advice

Which? debt expert Martyn Saville commented: 'These new figures offer a small glimmer of hope, but the overall figures are worrying as problem debt is still hitting hundreds of thousands of consumers. If you're struggling with debt, it's vital that you take advice from an independent, free debt advice organisation such as Citizens Advice, Consumer Credit Counselling Service (CCCS), Payplan or National Debtline. Do not approach a commercial debt management company.'

Commenting on the new insolvency figures, Frances Coulson, president of the Association of Business Recovery Professionals (known as R3), said: 'Our research shows that, against the backdrop of increased living costs and falling income, four in five consumers have changed how they shop in a bid to save money. A further drop in personal insolvency may signal that the reining in of domestic belts is starting to pay off.

'However, this data only captures those that are in formal insolvency procedures so we are unable to gauge how many households are struggling. What we do know is that on average, people tend start to struggle 20 days after payday, with many ‘bridging the gap’ by taking on more debt, which can easily snowball. It is important that those who are struggling set a budget.'

10 facts about debt

Despite the drop in personal insolvencies, new debt statistics from money education charity Credit Action paint a worrying picture for many consumers.

The charity's May debt report includes 10 facts you may find surprising:

  • Citizens Advice Bureaux deal with 8,004 new debt problems each working day;
  • 1,392 people are made redundant every day;
  • 847,000 people have been unemployed for more than 12 months;
  • £55,870 is the average household debt (including mortgages);
  • £29, 843 is the average amount owed by every UK adult (including mortgages);
  • £180m is the personal interest paid in the UK each day;
  • £24.88m is written off in loans each day by by banks and building societies;
  • Every 17 minutes a property is repossessed;
  • £133,200,000 is the daily increase in Government national debt (PSDN);
  • £1,156,000,000 will be spent today using a debit or credit card.

Joanna Parsley, Associate Director at Credit Action, commented, 'May's debt statistics show some interesting trends. Although the amount owed by every UK adult has fallen by approximately £30, in light of rising credit card interest rates, paying down debt has never been more sensible advice.

'With the cost of petrol rising still and with households experiencing the changes made last month to tax, national insurance and welfare benefits, 2011 looks set to be a year where household budgets are further squeezed.'

Which? borrowing and debt advice

If you're struggling to meet your mortgage repayments, it's vital to speak to your lender as soon as possible. For more information, read the Which? guide to avoiding repossession.

If you're struggling with debt, read the Which? How to deal with debt guide, which includes contact details for free debt advice organisations.

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